Investing in overseas property for a pension fund

Investing in property abroad as part of a pension fund is a very popular choice these days. Let's face it, traditional pensions and annuities are not offering the returns they originally promised.

If you buy a property abroad as part of your pension portfolio, then you will want to choose a stable market, where your investment should continue to grow, whilst giving an annual return. Although the increase in overseas property values and property has been known to slow down, over time just about all stable markets have shown increases.

And, even if you require a mortgage for your property abroad, as interest rates in the EU are currently much lower than in the UK, your monthly investment should go much further that investing in property in the UK.

Be aware that costs to purchase may be higher than in the UK (around 12% of the property purchase price in Spain), HIPs, stamp duty and so on are all raising the cost of UK property purchase. An investment in property overseas at least has the added benefit of providing a holiday home (and if you go for more than one property, you may even decide in your retirement to relocate to warmer climes!).

When it comes time for retirement, simply sell the property on, pay the relevant taxes then either sit back and relax, or reinvest in a property which will give you a stable rental return.

Of course, as the rules on stakeholder pensions have changed, you are now able to let your pension fund buy a property, and create an income for your future, without the tax implications. Please contact us for further information on this.