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This article from MoneyWeek sums of my own feeling of the PRS. It is titled "The death of buy-to-let property is a useful cautionary tale for all investors" and the below is their conclusion:
Never ignore political risk. Governments say that they want us to save for the long term. But every six months to a year (depending on how much of a show-off the chancellor of the day is), they will happily change the rules governing our savings without warning, and without any sense of continuity.
Sometimes these changes are justified, but more often they’re motivated by little more than political mood swings.
It’s one reason that we always suggest that you should have some savings in an Isa, as well as a pension. Either tax wrapper could be targeted by a future government, but at least an Isa is easy to withdraw your money from in a pinch.
Remember: all of this has happened under a centre-right government. What happens if we get a government that doesn’t even claim to be pro-wealth creation?
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
I still don't get it, I'm seeing so many of these articles but tell me where else I can make a guaranteed 10% minimum on my money each year + make myself safe for AT LEAST 5 years (fixed mortgage at low interest) + possibly/likely benefit from capital growth as a bonus which if I've picked my areas and investments right could absolutely smash the 10% returns on rental income.The market seems to be more challenging now, but as someone coming in fairly fresh, if you're setting up these obstacles are fairly easy to overcome?
Its not what your doing now Its the possible changes for the worse a future govt could bring to our business
we are hardly the flavor of the month with any political party and thats the problem
we all invest long term but the Govt changes things at the drop of a hat to get votes
The hard facts are Tenants in general dont vote Conservative but home owners do
hence we get taxed and regulated to move over for Home ownership
The government can change lots of things at the drop of a hat, that's partially why I'm against pensions. You could be made redundant if you work, you could be hit by a bus, you could invest in stocks and those stocks tank... but who can live like that. Just got to work with what is infront of you. I personally think even if they hit landlords more it will result in difficulty housing people who cannot afford to buy and they'll change the rules again to encourage landlords again.
But Pension Freedom was announced around the time of S24
I use the freedoms now ??
They are better now than they ever were not worse
My issue is when can I as a young person cash in on it. Pensions are a huge pyramid scheme and I have no idea what the lay of the land for pensions will be like in 30-40 years when I will need to cash in. I know everything can change by that time but for me I think property is a much safer security over the same period.
Hi Rich. When you say they're a pyramid scheme which structure are you referring to, government, SIPP, workplace pension, stakeholder?
Can I as Do you know much a SSAS pensions
I would not throw the baby out with the bath water in regard to pensions
a Gain of 40% from day one is not a bad thing also its ring fenced from Creditors Income Tax and CGT when the cash is invested
They can also be used to pass wealth down to anyone you choose again with tax brakes avoiding IHT
You can invest worldwide and in property too
I would set aside a little time and investigate what can be done I have always said today its wise to invest in all asset classes
I think our sector has a much higher chance of being changed more than pensions
Just look at the numbers now investing in auto enrollment SIPPs its a huge number so my own feelings are Pensions may well be restricted but not changed so I invest Now why I can and as much as I can NOW
I don't think pension 'freedoms' are better. I think they are a con. It was possible to transfer pensions into a SIPP and enjoy the same "freedoms" before. The big change is that once you start drawing your pension you can't change you mind and revert back to paying in again. Its unnecessary discrimination and limits choice for older people who may find it's harder to manage on a small pension than they thought. Luckily for me I activated my capped drawdown pension before these were withdrawn so I'm ok. For now.
Alison you can draw income from a pension and still pay in ??
You can withdraw your Tax Free Portion and still pay in up to 40k a year
If you draw Taxable income You can still pay money into the pension but only 4k a year
Pension Freedom allows you to also pass down your pension fund depending on how you have used the fund and age depends on how its taxed but If you pass it on its still lower than IHT
so pension freedom can help to arrange wealth
But you can only fund a pension up to age 75
A key consideration is tax liability. The key consideration is purchasing power.
With BTL the money spent to buy the asset is taxed, the process to buy the asset is taxed, the income generated is taxed, the process to seek the asset has charges that are akin to a tax because they're unavoidable, and finally the sake of the asset generates a tax. There are also maintenance fees along the way.
With a pension, the money used to buy the asset receives a tax break and that additional sum of money is then invested, untouched, for decades - in many instances. The capital gain is exempt of tax and the buying, selling and holding fees are minimal compared to BTL.
The income generated from the pension is taxed but is very likely to be at the lowest tax band, unless one is withdrawing a hefty sum.