A 60 year old man looking to retire and purchase an annuity today might be able to purchase as little as £5066 (index linked) for each £100,000 he has to invest.  That is less than a third of the average income of the same man the day before retirement.  That £5,066 is taxable as income and is likely to have to last for another 19 years.

It’s therefore not surprising that 3.9 million pensioners live below the poverty line.

A prudent person looking ahead might decide to top up his or her pension with other investments.  However, this too looks risky, with high initial (5-6%) and annual (1-2%) charges, and bonus rates falling by between 5 and 10% as equities have fallen by over 40% from their peak in August 2000 (Nationwide Home Survey 2002).

In the same time period, i.e. from August 2000, property prices have grown by 45% fuelled by a growth in the private rental market.  Why?  Because the population is growing, more people are moving to take up a new job, are unable to afford houses at their current prices or, sadly, getting divorced.  This has created a demand for more and smaller rental properties, which have at the same time increased in (capital) value for their owners.

As a consequence there has never been a better time to consider buy to let property as an alternative investment vehicle.  Property provides a balance of income, from the rent and capital growth from the rise in property prices as well as being realisable, tax efficient and something you can pass on to your children.