According to The Department of Work and Pensions, pension savings have dropped to its lowest levels in a decade with 38% of people putting money into plans compared with 46%. There are two main reasons for this: • Stock market volatility • Poor returns on most asset classes Whilst property buy to let experienced a boom period pre credit crunch (2008), it had almost stagnated by 2009/10 as recession took hold, which in turn led to a lack of mortgage products and falling house prices reduced the appetite and confidence of investors. Having said this, it also must be remembered that property as an asset class has fared far better than any other asset classes with regards to returns, especially as rents during this period have continued to increase.

1. Property Portfolio - Building an Alternative Pension?
According to The Department of Work and Pensions, pension savings have dropped to its
lowest levels in a decade with 38% of people putting money into plans compared with 46%.
There are two main reasons for this:
 Stock market volatility
 Poor returns on most asset classes
Whilst property buy to let experienced a boom period pre credit crunch (2008), it had almost
stagnated by 2009/10 as recession took hold, which in turn led to a lack of mortgage
products and falling house prices reduced the appetite and confidence of investors.
Having said this, it also must be remembered that property as an asset class has fared far
better than any other asset classes with regards to returns, especially as rents during this
period have continued to increase.
However, as the green shoots of the economy now start to show, we are now seeing the
emergence of an upward trend in the property cycle, which if history is anything to go by,
then we are at the beginning of a trend which should last for the foreseeable future.
Arguably, this process has already started as property prices are on the increase, especially
in London, which has induced the appetite for investors to return back into the market as
capital growth rises together with rising rents.
It must be remembered however, that property is not a one way bet, and if history has taught
us anything, it's this: we as investors must be very careful when harnessing the growth of
property - especially when our future security is at stake.
Due Diligence and Research is a MUST
Making the sums stack up on a buy to let opportunity is paramount, in that after taking away
the mortgage repayments and the monthly running costs, and also factoring the rental
income, the property should be self-financing. Of course generating good rents will also

2. depend in no small part on key indicators such as due diligence, location, rental demand for
the area and understanding what the local tenants require and so on.
A well-researched buy to let will set the foundations to managing and mitigating risk of
volatility in the housing market.
If the truth be told, even during the financial crisis and the correction in house prices, it is
important to know that certain areas of the country experienced stagnation in prices rather
than a fall and were the first areas to experience price increases as the economy stabilised.
Honing in on research and due diligence before making your decision is crucial because
buying a property based on sound market fundamentals will hold you in good stead over the
coming years - even if there are corrections in the market.
The Property Multiplier Effect
Fans of buy to let have always argued on longevity. A wise view when looking at property
investment over time - say for example 20 years. The argument is simple. Over a long period
property will more than likely increase in price together with rents and this has continued to
be borne out through research of historical data.
Furthermore, what puts property apart from other asset classes is the power of leverage.
One main advantage of property is that you can buy into an asset worth £150,000 with 25%
deposit and borrow the rest. If property prices were to increase at 3% per annum, then your
capital gains have gone up approximately 4 times.
Case Study*
Single mother of two Charlotte Hood, 34 from Hampshire.
She plans to use £40,000 savings as a deposit with a mortgage to buy a £125,000 two
bedroom flat in Basingstoke with an anticipated rent of £700PCM. Based on a buy to let 2
year fixed at 3.89%, it will cost her £275 a month (interest only) or £450 per month capital
repayment.
The figures show that if her £40,000 were left in a bank and her savings grew by 4% a year
for 30 years she would have £132,000 to retire on.
By using the same £40,000 to buy the £125,000 flat, whereby the value would also go up by
4% a year for 30 years, than the pension pot if she then went on to sell the flat would be
£414,000
It should be noted, that selling the flat would be the only sensible way to realise this case
and the profit gained even after tax.
So when comparing both strategies, it is clear that buying property as an investment strategy
is the most prudent form of investment when compared against other asset classes.
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*Case study courtesy of 'www.thisismoney.co.uk'

3. Tenants Have High Expectations
Once you decide that property is the vehicle for your retirement plans, then putting in place
the right strategy is important.
Of course capital growth strategies, monthly cash flow budgeting are important but not the
whole story. For example, attracting good tenants that will stay for the long term is important,
and the condition of the property has a big part to play in this. In this respect, new build
properties are excellent for attracting high quality tenants.
Investment in new build properties are a good bet as:
 They come as standard with new fittings, fixtures, boilers, radiators, kitchens,
bathrooms, flooring, electrics and so on.
 There is a less likely chance for things to go wrong. This is an obvious attraction for
both tenants and landlords alike.
 They come with guarantees. A reputable builder will always offer a 10 year builders
guarantee against any structural defects and a two year guarantee for internal
fixtures and fittings.
This truly gives peace of mind to all parties.
Summary
 Investing 25% of the value of the asset and fund the rest by way of borrowings, you
can achieve superior returns compared with other asset classes
 Focusing on market fundamentals at the bottom of a rising market will harness
capital growth and rent growth in a safe and secure manner
 Tenants have high standards and expectations, so think about new build
properties as this in turn delivers a different standard of tenant