It isnt hard to see why Britons have fallen in love with buy-to-let. Weve had a thing about bricks and mortar for years.
The idea of buying a property and getting somebody else to coverthemortgage by payingyou rent every month issimply irresistible.
Buy-to-let has helped to fuel the runaway UK house price growth of the last 20 years, and flattened young peoples hopes of getting on the property ladder.
The proportion of 25-34 year olds who are homeowners has collapsed from 59% to just 36% in the last decade, according to the English Housing Survey.
Youngstersjust cant compete with the power of buy-to-let.
Now the buy-to-let industry is gearing up for a fresh bonanza, thanks to forthcoming pension freedom rules.
The radical reforms will allow the over-55s to draw cash from their pension from 6 April, and spend it on whatever they like.
To sweeten the deal, they can take 25% of the money free of tax as well.
Youll never guess what theyre going to do with their sudden wealth. Oh, you already did.
Invest it in property.
Buy Buy Buy-to-let
One in three people heading for retirement are now considering purchasing a buy-to-let property, according to a recent survey by Platinum Property Partners.
Property solicitors NeglectAssist puts the likely figure at a hefty 80,000 new investors a year.
Thats on top of the 1.63 million existing buy-to-let investors, whose numbers rose 8% last year.
Once again, property is being mistaken for a pension.
Wall Of Money
From April, a tsunami of pension cash willstart flowing into the UK housing market.
Tim Wixted at NeglectAssist predicts this will lead to a property price boom and then a bust, as many landlords come unstuck by failing to do their sums properly, and buying at the top of an already inflated market.
Most investors will already have more than enough exposure to property prices, through their own home. They really dont need more.
High Prices Forever
This is the last thing the UK economy and housing market needs, let alonefirst-time buyers.
But nothing is going to stop lovestruck Britons from ploughing their pensions into over-priced bricks and mortar. Except maybe the next crash.
If you don’t want to punt your pension on the property market, there are easier ways of securing your retirement income.
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