October 25, 2016 - Latest: Pensions – sounding the retreat? by Steve Herbert

Over 55s planning more than three million future property deals

3rd September 2015


More than two-thirds, at 37%, of homeowners aged 55 and over are planning at least one more property purchase in their lives according to new research by Prudential.

The insurer’s analysis suggests that future dealings in the property market by householders currently at retirement age and above will account for more than three million property transactions, worth a total of more than £775bn.

However, contrary to some predictions, this does not seem to signal an explosion in property deals fuelled directly by the new pension freedoms. The study found that just 14% said their plans have come about as a result of the pension rule changes and just 10% think the changes make them more likely to buy a property in the future.

But 18% of those planning a property deal say they will not be buying a home to live in but will be buying second homes, buy-to-let properties, development properties or homes for their relatives.

Prudential’s research also revealed the scale of the property deals being considered by the over-55s – where the average maximum purchase price for their next property is over £250,000. One in five, or 20%, admitted they are willing to spend £350,000 or more.

The majority of respondents, at 83%, who are planning a property deal, said that their planned purchase is likely to be their last. However, not all of the older property dealers will be last time buyers as a significant 11% said they will probably buy again in the future.

Stan Russell, retirement expert at Prudential, said: “There was a lot of speculation that the pension freedoms would spark a rush of over-55s investing in buy-to-let property as a means of generating income in retirement. However our research suggests that this hasn’t yet been the case.

“In fact the process of withdrawing cash from a pension fund to purchase property and potentially generate an income is complex and could result in a large tax bill. Anyone aged 50 or over with a defined contribution pension is entitled to free and impartial guidance from the Government’s Pension Wise service, and many of those considering accessing their retirement savings under the new freedoms would benefit from a consultation with a financial adviser.”

The results of Prudential’s research also show that the biggest motivation for over-55s planning a property deal is to downsizing, with 43% of those questioned highlighting this as the primary reason.

Russell added: “Using money raised from a property sale could prove to be a helpful boost to retirement income for some. But it’s no substitute for starting to save as early as possible to prepare for eventual retirement.”

There is an almost equal split between those who expect to buy a property that’s more expensive than their current home, and those who plan to buy a cheaper property and bank some cash. Around 29% expect to spend more on their next property while 27% said they will spend less.

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