While many people aged 55 and over are seeking to buy another property, this is not necessarily a result of the pension freedoms, research from Prudential has claimed.
According to the life and pension provider, while 37 per cent of homeowners over the age of 55 are planning at least one more property purchase in their lives, few of these had been swayed by the pension freedoms.
Stan Russell, senior business development manager (pensions) for Prudential, said: “There was a lot of speculation that the pension freedoms would spark a rush of over-55s investing in buy-to-let property as a means of generating income in retirement. However our research suggests that this hasn’t yet been the case.”
The research suggested that while future dealings in the property market by householders over the age of 55 will account for more than 3m property transactions, worth a total of more than £775bn, only 14 per cent of the 1,157 adults surveyed said these plans had come about as a result of the pension rule changes in April this year.
The majority said their purchasing plans were part of longer-term plans to downsize.
Mr Russell added: “Using money raised from a property sale could prove to be a helpful boost to retirement income for some. But it’s no substitute for starting to save as early as possible to prepare for eventual retirement.”
In May, London-headquartered St James’s Place issued analysis warning people against investing all their pension into buy-to-let or property investment. Tony Mudd, St James’s Place divisional director for tax and technical support, said: “There’s no doubt buy-to-let can offer some attractive upsides, but investors who have saved diligently into a pension because of the tax breaks will baulk at the prospect of handing back 40 per cent or more in tax.”