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tuggybear

Can You Rely On A Property For A Pension?

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Scary reading, 3 in 4 has made no provisions for retirement!

I have No retirement pension, I could not afford to keep my pension running (£200 / month) :(

That and that robbing B@stard Brown taxing pensions, then relaxing rules on BTL as a pension vehicle, he's really doing a number on the British people! :angry:

Link : http://business.timesonline.co.uk/tol/busi...icle3510233.ece

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Guest Charlie The Tramp

Well to be honest if I get to between 85-95 years of age and the assets have run out my property should give me enough to end my days. :)

If I kick it before then I have no further worries. :rolleyes:

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Scary reading, 3 in 4 has made no provisions for retirement!

I have No retirement pension, I could not afford to keep my pension running (£200 / month) :(

That and that robbing B@stard Brown taxing pensions, then relaxing rules on BTL as a pension vehicle, he's really doing a number on the British people! :angry:

Link : http://business.timesonline.co.uk/tol/busi...icle3510233.ece

Property as a pension was always a bad idea as soon as everyone started doing it. Baby-boomers who think they will be able to release equity in their property and downsize to that bungalow by the sea are in for a big shock - their house will fall in value and bungalows will rise simply because every other baby-boomer had the same idea.

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Property as a pension was always a bad idea as soon as everyone started doing it. Baby-boomers who think they will be able to release equity in their property and downsize to that bungalow by the sea are in for a big shock - their house will fall in value and bungalows will rise simply because every other baby-boomer had the same idea.

That's not the way to do it.

You find a BTL and get the tenants to pay most, if not all, of the mortgage (repayment mortgage obviously). The rent increases over 25 years and the debt is payed. You now have an asset worth £x that pays you a retirement income. Whatever way I look at this it's a good idea.

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Is it just me, or is there something rotten about this country?

For a nation with so much apparent wealth, where the hell is it all? People turned to property for pensions, because the previous pension system failed. The sheeple lost their contributions. Now they realise (or soon will) that property has no guarantees. Unless you sell in the right DECADE, you're not going to benefit. So obviously this makes property unsuitable as a pension vehicle.

Pensions are an issue of affordability. With house prices (and prices generally) being so high, how can the average person in the UK afford to pay contributions on top of everything else? They can't, so they don't. And I am one of those people.

I believe this country has delusions of grandeur. A rapidly rising population is partly to blame, but was the standard of living ever really that great here anyway? I doubt it. The old class system has effectively divided the assets unevenly, and it will remain that way probably for all time. Who owns the land, owns the country. And as the island gets more and more crowded, conditions get more unbearable.

It's just an opinion of course, but I am well travelled, and I know what I have seen abroad. I don't know where this country is heading, but it worries me.

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You find a BTL and get the tenants to pay most, if not all, of the mortgage (repayment mortgage obviously). The rent increases over 25 years and the debt is payed. You now have an asset worth £x that pays you a retirement income. Whatever way I look at this it's a good idea.

Are you seriously unaware of the current BTL situation?

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Are you seriously unaware of the current BTL situation?

What, that it's saturated with amateur landlords with IO mortgages on grossly overvalued new build junk? err yeah! What of it with regard to my post?

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Is it just me, or is there something rotten about this country?

For a nation with so much apparent wealth, where the hell is it all? People turned to property for pensions, because the previous pension system failed. The sheeple lost their contributions. Now they realise (or soon will) that property has no guarantees. Unless you sell in the right DECADE, you're not going to benefit. So obviously this makes property unsuitable as a pension vehicle.

Pensions are an issue of affordability. With house prices (and prices generally) being so high, how can the average person in the UK afford to pay contributions on top of everything else? They can't, so they don't. And I am one of those people.

I believe this country has delusions of grandeur. A rapidly rising population is partly to blame, but was the standard of living ever really that great here anyway? I doubt it. The old class system has effectively divided the assets unevenly, and it will remain that way probably for all time. Who owns the land, owns the country. And as the island gets more and more crowded, conditions get more unbearable.

It's just an opinion of course, but I am well travelled, and I know what I have seen abroad. I don't know where this country is heading, but it worries me.

I'm with you, Darkman. The UK lives on an illusion of prosperity, not real prosperity. A lot of homes and cars are uninsured, tv licenses unpaid, mortgages and council tax in arrears, personal debts at horrific levels. Some of it is fecklessness, but much is simply that people can't afford to pay their bills.

Your personal financial stability seems to rest to a large degree on whether you bought a house more than ten years ago. Those old enough to have boughts for peanuts in the 70's or 80's are sitting pretty, most of the remaining majority have problems.

The illusion that the UK is OK is just that. Life as we live it is rapidly being eroded by an ever decreasing quality of life. Over-regulation everywhere; overly pressured workplaces and poor wage increases, longer hours, job insecurity, overcrowded roads, expensive childcare, inadequate schools and hospitals, poor urban transport, anxiety about crime (perceived or actual) rising prices and so on.

Like you, I don't know where this country is heading.

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For a nation with so much apparent wealth, where the hell is it all?

....the country threw away it's wealth when it decided the way forward was financing and trading houses... previously manufacturing and trading with other countries through exports was a chosen wealth provider ....not today ...we are mainly importers of junk which soon we will not be able to afford....the brains of Nulabour are in waste, borrowing and spending .....but research, investing and building value ..what about them..?... ...no! ...thats all too capitalist for them .....until they are out.. we are doomed.... <_<

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I think the question will shortly become.

Can you rely on a pension, to pay for your property as many people on interest only mortgages wake up to the realisation they have been robbed by a government, and will spend a lifetime paying for something they will never own.

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I have no pension. The reasons from my point of view are as follows:

1] It wasn't until I was late 20s that there was much talk about making your own provision.

2] I've never worked for a company who offered a pension. I've never worked for a company for more than 15 months in any case

3] When I was late 20s I did start a pension, I started small, £15/month, intending to increase that, then got made redundant. Payments stopped and by the time I had another job and had caught up with other financial commitments (I was living in a mobile home and had that personal loan to service) the pensions company wanted me to back pay every payment I'd missed, which I couldn't do. Then they froze it.

4] Then came the downturn in the economy of the early 80s. I've pretty much been in/out of work since then. Mainly having up to 2 jobs per year, with periods in between being self-supporting with bits/bobs of self-employment if anybody had any work going I could do

5] You couldn't stop/start a pension as your circumstances changed, so it was impossible to ever feel one was in a position to start/maintain payments

6] I am now late 40s.

As I see it now, I don't have the confidence that I would have an income for the next 20 years to guarantee paying money in. Even if I could, I'd not be able to afford a lot, say £100/month max (that would probably be stretching me even when I was in work). If I managed to scrimp/save and put aside £100/month EVERY month for the next 20 years, when I retire my pension I'd get back would be ... £100/month every month. So I'd have to then live 20 years beyond retirement to get my money back.

Also, if I was getting £100/month in from a pension, I'd no doubt lose that top up Minimum Income Guarantee.

By doing nothing, I see that I would get the basic single person's pension + Minimum Income Guarantee. Which, today, is £126/week. This is £541/month. If my housing is paid for (by owning, or renting and getting HB to pay that) then compared to most of my working life I would actually be better off.

So ... where's the risk?

For single people, who have spent their lives on low wages, it's not a culture shock to live on that.

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I have no pension. The reasons from my point of view are as follows:

1] It wasn't until I was late 20s that there was much talk about making your own provision.

2] I've never worked for a company who offered a pension. I've never worked for a company for more than 15 months in any case

3] When I was late 20s I did start a pension, I started small, £15/month, intending to increase that, then got made redundant. Payments stopped and by the time I had another job and had caught up with other financial commitments (I was living in a mobile home and had that personal loan to service) the pensions company wanted me to back pay every payment I'd missed, which I couldn't do. Then they froze it.

4] Then came the downturn in the economy of the early 80s. I've pretty much been in/out of work since then. Mainly having up to 2 jobs per year, with periods in between being self-supporting with bits/bobs of self-employment if anybody had any work going I could do

5] You couldn't stop/start a pension as your circumstances changed, so it was impossible to ever feel one was in a position to start/maintain payments

6] I am now late 40s.

As I see it now, I don't have the confidence that I would have an income for the next 20 years to guarantee paying money in. Even if I could, I'd not be able to afford a lot, say £100/month max (that would probably be stretching me even when I was in work). If I managed to scrimp/save and put aside £100/month EVERY month for the next 20 years, when I retire my pension I'd get back would be ... £100/month every month. So I'd have to then live 20 years beyond retirement to get my money back.

Also, if I was getting £100/month in from a pension, I'd no doubt lose that top up Minimum Income Guarantee.

By doing nothing, I see that I would get the basic single person's pension + Minimum Income Guarantee. Which, today, is £126/week. This is £541/month. If my housing is paid for (by owning, or renting and getting HB to pay that) then compared to most of my working life I would actually be better off.

So ... where's the risk?

For single people, who have spent their lives on low wages, it's not a culture shock to live on that.

I dont see a problem with it, and I think its what many people will end up doing. I just hope that the burger flippers of tommorow armed with degrees in sports science can afford to pay our pensions.

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The other thing is, you are assuming that the government are not going to change the rules about the pension top up. I see trouble ahead with pensions. Maybe you should start a stakeholder pension, the minimum is only £20 per month for when times are hard, and you can get a 25% lumpsum when you retire. Now that could come in handy.

On the other hand, that money really should be paying down debts first (mortgage). I am having the same dilemma at the moment, and have chosen to join a teachers pension (I am freelance one day a week in a school but have just found out I am entitled to it). I will probably do additional payments. Good stakeholders are Scottish Widows, and Friends Provident, and you can get them execution only through Cavendish online and pay a really low annual management fee (MSE tip).

Kin ell its really hard to be a grown up. I don't remember my parents having so much to worry about!

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That and that robbing B@stard Brown taxing pensions, then relaxing rules on BTL as a pension vehicle, he's really doing a number on the British people! :angry:

Pensions have been taxed for ages (when the money comes out, not when it's paid in), Brown simply removed the dividend subsidy. Quite right too, I don't want my taxes bloating someone else's pension whilst I'm struggling to pay off a student loan and save up a deposit for a house.

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If you have cash now and bought a house you would get an income from the rental. After 20+ years you'd have the same amount back as you paid for it (depending of course on how much rent you charged/repairs)

You'd also still have the income.

What problems would that give you?

You'd have an income that very likely would be taxed as income (Pensioners tax allowance is 7k+) but you'd have an asset that you'd have to avoid paying CGT if you sell now, inheritance tax if you pass it on to your kids,

But if after 20 years you find you have a property not worth a lot because you've not maintained it well,then you might not have had the goldmine you thought.

And if you had the cash now and put it into a house it'd stop you worrying about the banks stealing your money when they go under. You'd just have to worry about the house being a non liquid asset that might not be worth as much as you paid for it.

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I will never pay money into a private pension scheme, the reason for that is, the money would be more or less out of my control. The best place in my opinion to put money for retirement is in cash ISA's, High interest savings, NS&i and a smaller amount in higher risk, like a few shares/funds here and there, even a small percentage in PM's. All you have to do is set aside a fixed amount each week/month or year to meet your target. Then by the time you retire, you might even be ok living off the interest ;)

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I will never pay money into a private pension scheme, the reason for that is, the money would be more or less out of my control. The best place in my opinion to put money for retirement is in cash ISA's, High interest savings, NS&i and a smaller amount in higher risk, like a few shares/funds here and there, even a small percentage in PM's. All you have to do is set aside a fixed amount each week/month or year to meet your target. Then by the time you retire, you might even be ok living off the interest ;)

If your employer makes contributions to your pension then it's silly not to take it, even with all the factors against pensions.

Keeping your pension money in private investments under your own control means that if you ever become unemployed you can't claim dole, because there's a minimum savings limit. That's not a problem for most sane, hardworking people as there are always jobs that pay more than dole, but work makes it harder to find a proper job.

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That's not the way to do it.

You find a BTL and get the tenants to pay most, if not all, of the mortgage (repayment mortgage obviously). The rent increases over 25 years and the debt is payed. You now have an asset worth £x that pays you a retirement income. Whatever way I look at this it's a good idea.

I am a bear and am planning on the basis of a 50% fall in nominal prices, but I think Dom is quite right here. As a general rule BTL most of the time is a reasonably good idea if you have enough spare cash to keep it going through voids and can keep up with repairs without a financial crisis. Good timing on when you purchase it will give you a better return, but most years you should be able to look forward to some kind of return.

What Dom isn't saying is that leveraging the same idea up to become worth millions is a good idea.

It is important to remember that owning an asset is a good thing. The fact that property is cyclical in value doesn't altert the fact that it is an asset and will always have some value.

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The notion of your property being your pension was never a credible actuarial proposition. It was just a convenient urban myth, one that allowed people to stop worrying and MEW for some new granite work surfaces, whilst happily ignoring the fact that they'll be working into their 70's.

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The notion of your property being your pension was never a credible actuarial proposition. It was just a convenient urban myth, one that allowed people to stop worrying and MEW for some new granite work surfaces, whilst happily ignoring the fact that they'll be working into their 70's.

What's the answer then? I can't see how buying a second property, or letting tenants buy it, is any different to paying into a fund. Except that you "dollar cost average" into a fund whereas with property you use leverage to purchase upfront and benefit from future currency devaluation.

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I am a bear and am planning on the basis of a 50% fall in nominal prices, but I think Dom is quite right here. As a general rule BTL most of the time is a reasonably good idea if you have enough spare cash to keep it going through voids and can keep up with repairs without a financial crisis. Good timing on when you purchase it will give you a better return, but most years you should be able to look forward to some kind of return.

What Dom isn't saying is that leveraging the same idea up to become worth millions is a good idea.

It is important to remember that owning an asset is a good thing. The fact that property is cyclical in value doesn't altert the fact that it is an asset and will always have some value.

Yes but Dom was addressing a point I didn't make. My point referred to those who see their current home as an asset to be realised and downsize from when they reach retirement age. I'm suggesting that those who are currently following this road are in for a rude awakening because the changing demographic will mean an increase in cost of retirement properties as more people want to buy them and a decrease in value for family homes as more people wish to dispose of them.

Dom's comment added-up to buy low, get someone else to pay the mortgage, sell high. Not much financial insight there, and as we all know the wheels of that particular bus fell-off around about the time the return dropped below 10%, I'd say pretty-much irrelevant as an investment strategy from about 2000 onward.

The BTL counter-revolution is now well under way, and anyone with more than a 70% mortgage on such assets is unlikely to survive.

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Is it just me, or is there something rotten about this country?

For a nation with so much apparent wealth, where the hell is it all?

abroad hence the deficits

Edited by Ash4781

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Property is part of a good pension, once you have fully paid for it...other wise investments made over a working life can top up income without worry, aggravation or cost. ;)

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  • 297 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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