Retirees are increasingly looking to purchase property once the pension freedoms take effect on 6 April, leading analysts to anticipate a boom in the buy-to-let market.
A Bank of Ireland report found that 42 per cent of pensioners plan to take the lump sum with the intention to buy property. Londoners are the most keen, with 47 per cent stating that they intend to purchase property with money from their pension pots.
Buy-to-let could be an appealing use of property purchased with pension funds as it offers retirees an income, a potential appreciation of value over time, and something to pass on to their children. This month’s Money Management cover story investigates.
While the pension freedoms offer retirees greater flexibility with their savings, many may be disappointed to discover that it may not be enough to make a purchase.
Daniel Bailey, mortgage adviser at Middleton Finance, said, “There have been many enquiries from those retiring soon and looking to invest in property using their pension pot. But clients are also frustrated because they feel they might not have enough money in their pot.”
Research from Rightmove echoed this sentiment, stating that buy-to-let investors cashing in their pension pots to raise larger deposits may drive up prices, especially at the low end of the market, with estate agents reporting an uplift in interest ahead of the pension freedoms.
