A third of over-55s are planning on purchasing a property


In September, we discussed how people over the age of 55 could be losing out on money with the introduction of the pension freedoms scheme, with a survey suggesting that those who took advantage of the scheme were actually losing out due to a lack of understanding about the terms and conditions involved.

However, recent figures by the international financial services group Prudential have shown that more than a third of people who are eligible to take advantage of pension freedoms will be doing so to buy at least one new property.

Why are over-55s buying properties?

While a large percentage of people shared the same intention of buying a property, the reasoning behind the property purchase was mixed, with the survey run by Prudential revealing the following figures.

43% of over-55s want to downsize their property, 33% don’t believe their current home is in a location that is friendly or appropriate for older people and want to move somewhere more suitable, while 21% are fed up with the noise levels in their surrounding area and wish to move somewhere quieter.

Not all about relocation

What may be more interesting is that of those planning to buy a new property, 18% don’t plan on buying a new main residential property. These people instead plan on purchasing either a second home, a buy-to-let property, homes for their family members or a development property.

The Pension freedoms scheme seems in part to be what encouraged this increase in house purchases among the over-55s, with 14% saying that this new scheme was the direct reasoning behind them buying a new property. 10% of people surveyed said that pension freedoms are likely to encourage them to buy a property further down the line.

The fear of a buy-to-let rush is unfounded

Commenting on these statistics, Stan Russell, a retirement expert at Prudential said that the speculation that pension freedoms would lead to a rush of over 55s using their money to invest in buy-to-let properties has yet to happen. Though, of course, this may change once more people begin to fully understand the pension freedoms scheme, as it could successfully generate income for retirement. Russell went on to say that the process of withdrawing money from a pension fund in order to generate income could be a costly process that may result in a large tax bill, especially with potential changes coming to the buy-to-let sector that could have a financial impact, such as the removal of the wear and tear legislation.

Peter Russell confirmed that saving money from a property sale if you plan on downsizing could boost retirement income, but believes that beginning to save early is the best way to prepare for retirement.

Whether you are looking to buy a new property or sell your current home, here at CPS Homes, we can make the process as smooth as possible. We have several properties that would make ideal buy-to-let projects in various locations across Cardiff, including Cathays and Pontprennau. We can also help potential buy-to-let owners prepare for Rent Smart Wales, a new landlord training and licensing scheme coming into force in 2016 across Wales. So, if you’re looking to use your pension freedoms as an investment opportunity, don’t hesitate to contact us, or pop into our Albany Road branch for more information.

30 December 2015


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