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Over 55’s cashing in pensions are choosing Spain

The recent changes to the UK pension system has allowed the over 55’s to cash in their pensions for investments. It was expected to see a large number of these invest in UK properties and for these people to be the new buy to let landlords.
According to reports only around 10,000 of the 500,000 that used the new rules will become a buy to let landlord in the UK. This is mainly due to the significant decreases in rental yields in many areas of the UK.

The structure of the UK property market has made investing in the south, south-east and south-west very expensive for people close to pensionable age. The more affordable areas in the north and the north-east do not attract sufficient rental returns to make any investment worthwhile. The average rental yield in the UK has fallen to 5% and in London it has fallen to 4.3%. It has been reported that it is difficult to generate any income after costs in London.

The majority of private pensions released are below £100,000 which can attract a tax bill of around £20,000. With the average property price in the UK being £286,000, few would be able to buy a property outright. The more attractive alternative that more and more people in the UK are turning to is to invest in property in Spain and particularly the Costa del Sol. The main attractions of the Costa del Sol is the growing strength, stability and confidence in the areas property market which is one of the leading forces in the Spanish economic recovery.

The strength of the pound against the euro means that UK buyers are getting more property for their money as their budgets have increased or getting cheaper investments than they did just over a year ago. Also to take into consideration is that the banks are beginning to loan more in greater volumes than they have in the past 5 years; rental yields in sort after regions such as the Costa del Sol are as healthy as they have ever been and the area is one of the most popular all year round holiday destinations in Europe. Add in the climate, the lifestyle, the diverse scenery and abundance of excellent beaches and activities and not forgetting the excellent food and drink on offer at very reasonable prices, owning a property on the Costa del Sol becomes increasingly more attractive.

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