MONEY MATTERS by Scott Woods of Bingham-Woods Independent Financial Advisors, Spalding

Staff at Bingham-Woods Independent Financial Advisors, Spalding.  Photo by Tim Wilson.
Staff at Bingham-Woods Independent Financial Advisors, Spalding. Photo by Tim Wilson.

New pension freedoms are a bonus for buy-to-lets

Around 53 per cent of retirement savers say they would consider investing in or are already investing in buy-to-let properties to increase their income in retirement, according to the latest research. 
Mortgage lenders Kensington commissioned Consumer Intelligence to survey a representative sample of nearly 1,000 retirement savers, aged over 40 at the end of March. 
The survey found that eight per cent of retirement savers are already investing in the buy-to-let market, while another 45 per cent said they would consider it. 
New pension freedoms introduced a month led to suggestions that it would spark a buy-to-let boom and the website FTAdviser reported in February that advisers and estate agents had acknowledged that this could be the case. 
However, many experts now claim that the scale of the likely investment is being overblown as many people do not have a large enough pension pot. 
The Council of Mortgage Lenders also recently pointed out that the potential trend of buy-to-let landlords is likely to be overstated as the majority of pension pots are likely to be too small to make significant property investment, while many may be put off by the risks involved. 
Steve Griffiths, head of sales and distribution at Kensington, said: “Buy-to-let will not be right for everyone and anyone planning to do so needs to get advice from a broker, as well as advice on other issues including tax.” 
There have been other warnings of the risks inherent in property investment, with Prudential’s head of business development for retirement income Vince Smith-Hughes warning that people need to think about their circumstances before going ahead with such an investment.

Money Matters by Scott Woods.

Money Matters by Scott Woods.

Mr Smith-Hughes said: “Taking your money out of a tax-efficient wrapper, i.e. their pension, and putting it into an investment which will not be so tax-efficient is something that might not be appropriate for everyone.”

Also remember that your home may be repossessed if you do not keep up repayments on your mortgage.

Buy-to-let will not be right for everyone and anyone planning to do so needs to get advice from a broker, as well as advice on other issues including tax. 


Steve Griffiths, head of sales and distribution at Kensington Mortgages