Can BTL really deliver better returns than a pension?

Can BTL really deliver better returns than a pension?

Despite the government’s recent tax hikes and tougher criteria for mortgage lending, over the long term, the right property investment can provide an enviable pension pot.

According to Armistead Property, there are plenty of reliable surveys that show that despite the property market being more risky than pensions, property is nevertheless, king.

Though pensions will beat a portfolio of just one property, those investors who are willing to take more risk, by taking out a mortgage and managing multiple properties, have the potential to exceed a pension pot.

Data from AJ Bell reveals how much £100,000 would grow (in capital and returns) over 10 and 20 years in three scenarios. Using historic and housing stats, the projections compare investing in a pension (assuming a basic rate taxpayer) with someone buying a single buy-to-let property without a mortgage and with someone buying three properties with a total mortgage borrowing of £300,000.  The original £100,000 is split into three where each third becomes a 25% deposit on a property. Stamp duty, tax and other costs are factored in with the property investments.


Value of Investment Over 10 Years

Annual Income Over Period (Pre-Tax)

Value of Investment Over Another 10 Years

Buy-to-Let (1 x property)




Buy-to-Let (3 x properties)




Pension drawdown after first 10 years




Peter Armistead, Director of Armistead Property comments: “The research shows that three buy-to-let properties produce £42,000 more than a pension over the 10 years.  However, property investment comes with greater risks such as fluctuating house prices and capital growth; void periods; fluctuating rents, maintenance issues, tenant management issues etc.  Property is definitely a long term investment and does have many drawbacks as an asset class which a pension doesn’t, the most notable one being lack of liquidity.

In an ideal world, people should be investing in both a pension and property from as early an age as possible and ideally from your 30’s.  It is advisable to spread the risk and have investments for the future in more than one pot.

In my 20s, I had a normal day job before becoming a full time property investor in my 30s. During my 20s, I managed to save up the deposit for my first house.  I lived in that for a few years, then remortgaged it and took the cash and bought a second place.  I kept the first property, rented it and lived in the second.  Two years later, I did the same again.  After six years of doing this I had four properties worth over a million with £300,000 of equity.  All of this came from an initial £30,000 which I had saved up. That was the 1990s, but the general principles still hold true today.

I would definitely advise having both a pension fund and investing in real estate, but it’s important to consider the two in separate terms.  If you are using a managed pension fund then you don’t need to be hands on with that investment.  Property on the other hand, requires you to actively manage it and treat it like a business not just an asset class.  If you don’t want to take up the day-to-day issues with the property, then you can (as most investors do) instruct a lettings agent to do all of this work for you, but you will still need to manage the lettings agent.”

Join our mailing list:

Leave a comment

Our Next Event

Buy-to-Let Roadshow July 2017

Buy-to-Let Roadshow July 2017

Newcastle - 18/07/2017

Bolton - 19/07/2017

Derby - 20/07/2017

Reading - 21/07/2017

Register now

Latest Comments

jason hadzikostas
jason hadzikostas 28 Jun 2017

The most important thing is a budget. Students have to manage their spendings in food, house maintenance, books and many other things. According to me, student Studios are the perfect option for them as...

view article
SecomTech 22 Jun 2017

AT Last...This was discussed years ago and there was a move towards landlords registering their bad tenants on a database..(can't remember where) It seems a logical step though our leaders will probably...

view article
Bertrand 02 Jun 2017

How about the Welsh Govt introducing a scheme to protect landlords against "rogue" tenants who are then taken to court for criminal damage to the properties they trash. Pretty unlikely I suspect and politically...

view article
AmberMorris 25 May 2017

"Please don't pick a novelty tune-playing doorbell. They're not 'fun'. They're stupid." Laughed a lot to this. It's actually true, though.

view article
Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

view article
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

view article
Izzy 16 May 2017

This is such a great a post. I love the detail you've gone into. It's a very useful article for helping those who are looking at deciding which sector they would like to go into! When I first started investing...

view article
paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

view article
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

view article
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

view article
Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

view article
Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

view article

Related stories

More articles from Landlords

Buy-to-Let Roadshow
July 2017

18th-21st July

4 days
7 specialists
4 locations
Free to attend

Click here to register now