Research from a leading pensions provider has indicated that 20% of over 55’s are thinking of purchasing their desired retirement home now, then letting it out until they reach retirement age.
Data from the report conducted by Prudential also found that more than half of would-be potential investors plan to use their pension savings to fund their property purchase.
‘Buy-to-let-retire’
The provider says that the trend of ‘buy-to-let-retire’ seems to be making a challenge against the more conventional route of selling up and downsizing during retirement.
Of those over the age of 55 that had already made a buy-to-let investment, almost one in three stated that had done so to secure funding for a home that would one day become theirs.
52% of people in this age group looking to, ‘buy-to-let-retire’ noted that they would think about using a lump sum from their savings to fund their investment. This follows the changes made to pension regulations that came into effect in April 2015.
Additionally, data from the research shows that some over 55’s have purchased property to pass down to a loved one. 17% of people in this age bracket said that they chose to invest in bricks and mortar for this reason.
More over 55’s investing in buy-to-let
Rising popularity
Findings from the report also show that the popularity of buy-to-let among older people is growing. 29% of over 55’s surveyed said that intended to make a buy-to-let investment in the next two years. Of these, 70% said that this would be their first investment in the sector.
Stan Russell, retirement expert at Prudential, said, ‘the advent of older people opting to buy-to-let-retire is an interesting development and in a post-pension freedoms world its appeal is understandable. However, there are a number of risks involved for anyone looking to take money from their pension savings, irrespective of the reasons.’[1]
‘Before making decisions that could reduce retirement income in the future, not mention increase this year’s tax bill, it is important to make the most of the advice and guidance available. The Government’s Pension Wise service provides free and impartial guidance on accessing pension savings, while a professional financial adviser can help retirees navigate the pros and cons of using pension savings for property investment. The simplest approach for most people looking to give themselves choices and secure their ideal home when they retire is to save as much as possible into a pension as early as possible in their working life,’ he concluded.[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2016/3/buy-to-let-to-retire-is-the-new-downsizing