More Investors See Property As A Pension

With a growing number of people becoming disillusioned with pensions and bank saving rates at an all-time low, more investors understandably now see their properties as a means of funding future retirement, research shows.

According to a survey conducted by BDRC Continental, 61 per cent of landlords plan to live off the rental income from their investment properties, 20 per cent will sell some of the properties in their portfolio, whilst five per cent intend to dispose of all of the properties in their portfolio to fund retirement.

Mark Long, director at BDRC Continental, said: "Landlords consistently tell us that they see their property portfolio as forming a critical part of their pension provision for the future. On average, landlords intend to remain active in the rental sector for another 15 years or so, and see a combination of capital gains and rental income as underpinning their pension strategy."

With research showing tenant demand increased by seven per cent in the third quarter of this year and average yields increasing 0.5 per cent to 6.7 per cent, it is not surprising that many private landlords view property to be a safer bet than other investments such as pensions.

Adam Feather, managing director of Robert Anthony estate agents, says that his company has seen a sharp increase in the number of people looking to invest in properties in the capital, particularly from people overseas, with houses and flats for sale in Little Venice, Regents Park, Primrose Hill, Marylebone, Hampstead and Baker Street proving particularly popular.

"Property prices in central London and the areas surrounding it are expected to edge up faster in the next few months as the supply and demand imbalance becomes even more pronounced," Feather said. 

The problem facing many tenants is that the supply of houses and flats to rent in Primrose Hill, Regents Park, Marylebone, Baker Street, among a host of other highly desirable areas are in short supply, which in turn is pushing rents higher as a consequence; an attractive proposition for existing landlords and investors looking to acquire properties in those areas.

Andrew Ellinas, director at leading estate agents Sandfords, commented: "We expect an influx of both investors and immigrants including French bankers and entrepreneurs coming over here for the more business-friendly environment. This invasion on two fronts will boost both ends of the market, with lettable flats at the lower end being snapped up by investors and large family homes being in demand from business people looking for somewhere to live." 

Any investor looking to take advantage of high demand for houses and apartments to rent in Marylebone, Primrose Hill, St Johns Wood, Baker Street, among other highly desirable districts, by acquiring property, may wish to consider Neil Yong's ‘10 minute rule'.

Young, founder of property investment firm Young Group, has personally accumulated a private property portfolio collectively worth around £10 million. Geographically, all of Young's investment properties are located in London, where prospects for capital growth and high rental returns are generally good. He says he would not consider buying outside of London or even abroad as it does not fit in with his strategy.

Young has adopted what he refers to as his "10 minute rule", which means that he only buys residential properties which are located within close proximity to good transport links and amenities.

"I'm primarily only interested in properties that are situated within 10 minutes walking distance to good transport links, particularly a tube station, food stores, bars and restaurants, as these facilities are generally in high demand from tenants."

Wherever you choose to invest in property, always ensure that you conduct all necessary due diligence prior to investing.