Just 1 bad tenant can wipe out an entire pension pot …
With 25% of retirees planning to user their pension pot to buy an annuity, following reforms announced in this year’s Budget, LRS wonders how prepared these ‘silver-savers’ actually are for becoming a landlord.
Following the biggest shake-up of the pensions system in generations, pensioners can now take more of their pension pot as up-front cash, and by April 2015, everyone will be able to take as much as they want from their pot and remain subject only to regular tax rates. This will free up the combined savings of over 400,000 retirees per year – something like £14bn – for investment in other, more attractive, avenues.
Recent research by Hymans Robertson found that of the 75% of savers who would not use “most or all” of their savings to buy an annuity, 32% plan to take most of their pot in cash and use some to buy an annuity. The research also found that 12% will take their whole pot as cash without buying an annuity at all and 31% will keep control of their money and draw an income from the pot each year.
However the majority of these savers are currently unaware of the absolute minefield that property involves and those that plan to get involved in buy to let need to realise the following:
- Just one bad tenant can wipe out an entire pension pot in two seconds flat, without the correct safeguards firmly in place.
With the introduction of welfare reform via Universal Credit looming, the UK’s new Immigration Bill about to enter into law, Selective Licensing Scheme proposals popping up all over the country, etc – potential landlords need to understand the importance of accurate tenant referencing and landlord communication.
Without generalising, the more mature landlords amongst us are especially vulnerable to being taken advantage of by rogue tenants – as they can be more trusting and follow a different code of ethics to today’s generation, borne out of, for example, rogue builders focusing on elderly clients – and therefore need to take action even before buying their first property.
None of us know everything, so being up-to-date on key landlord and property legislation is paramount to successful buy-to-let investment.
A supportive network of landlords and letting agents can make this process a lot more enjoyable and easier, which is what we primarily offer at LandlordReferencing.co.uk. Couple that with a system that prevents bad tenants gaining tenure, as well as being able to help good tenants who have or have had a bad credit history but a great rental history and you’re three steps ahead of the game already.
Without proper tenant referencing procedures firmly in place you would have more luck going into a casino and putting all your money on red or black, instead of investing into property.
Please CLICK HERE to leave a comment on this issue.