2015 will see a radical change in the UK buy-to-let market, as the country will begin to see George Osborne’s revolutionary reforms coming into force. As of April 2015 pensioners will enjoy the much-anticipated freedom of how to go about their pensions.
Up until now retirees have been forced to exchange life savings for a guaranteed income after their retirement. However, the new regulation allows these savers to access as much as they want from their pension funds, once they reach the age of 55. Many who are unsatisfied with the current regulations have been eagerly awaiting these changes, in the hope of more autonomy and control over their retirement finances.
Research by Direct Line for Business reveals that one in three people aged 45 to 64 with a pension are contemplating using their savings to invest in property as an alternative to traditional pension funds, providing the market with a massive cash injection. Almost a quarter of people are in favour of this investment due to the security it offers, whilst 17% are attracted by the expected capital appreciation. Furthermore, 9% of those surveyed said they liked the idea of leaving behind an inheritance to their children.
However, the financial experts advise exercising caution when choosing a pension scheme, as certain factors such as important tax consequences, will play a major part in deciding which solution is most suitable to each individual.
On the other hand, the head of Direct Line for Business Jazz Gakhal argues that buy-to-let is a “flexible investment” that provides an “immediate source of income”, whilst being a “long term asset”. Generally, experts claim that lifting the heavy pension regulations could lead to a total of £5billion being poured into the property market through pensioners’ savings, as buy-to-let becomes a viable option for securing a consistent income in retirement, whilst ensuring that more homes are available for generations to come.
The new pension regulations could lead to a total of £5billion being poured into the property market.
Taking advantage of the return offered by buy-to-let properties, “silver landlords” are going to push up house prices. Additionally, George Osborne’s new stamp duty system will lower the cost of acquiring properties worth less than £937, 000. In essence, 2015 is going be a positive year for the UK buy-to-let market, as it will see a new demographic increasingly investing in the British property market.