Buy-to-let is not as secure an income stream as some pensioners may be led to expect, Simon Morris has warned.
The independent investment consultant said that, with an interest rate rise looming and following the pension freedoms, increasing numbers of people may have been tempted to invest their pension pots into buy-to-let property.
However, he warned against people putting all their eggs into this basket without getting advice. He said: “No investor should cash in their pension to invest in buy-to-let in hopes of securing a stable income stream without first weighing up the risks and rewards of buy-to-let.”
In June, data from the ABI showed that some savers were choosing to take advantage of the pension reform. Between April and May 2015, almost a quarter of a million payments worth £1.8bn were made to customers from pension pots.
An Office for National Statistics Study of 20,000 people showed that 42 per cent believed that property is the secret to creating the largest pension fund possible; a 10 per cent rise from 2010.
Adviser view
Philippa Gee, founder of Shropshire-based Philippa Gee Wealth Management, said she agreed with Mr Morris about people channelling their money into buy-to-let schemes. She said: “This sort of practice rings alarm bells for me; looking for guaranteed returns when there are not any.
“When interest rates start to rise the situation will be more difficult.”
