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Half of London retirees will turn pension into buy-to-let

Half of all retirees in London are planning to use their pension pots to invest in buy-to-let property next year, new research shows.

A Bank of Ireland study shows 29 per cent of retirees nationwide are looking to use new freedoms announced in this year’s Budget to buy property and generate rental income in retirement.

In London the figures are much higher, with 47 per cent looking to shift from pension to property next April.

A further 13 per cent will use a lump sum to pay off the balance on their own mortgage.

In total, half of all Britons who are not landlords are interested in entering buy-to-let within the next two years.

Despite the interest, the Bank of Ireland found 30 per cent of potential landlords did not understand the tax implications of rental income.

Bank of Ireland UK mortgages commercial director Mark Howell says: “Our research has identified a massive knowledge gap in the area of buy to let mortgages, which is particularly concerning as the market is currently experiencing growth.

“It’s important that people seek financial advice on tax matters before making big financial decisions or investments, like buying a property to let.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. “It’s important that people seek financial advice on tax matters before making big financial decisions or investments, like buying a property to let.” …. says it all… aspecially when it’s coming from someone who benefits from BTL purchases.

    Take £100k (for example) out of a tax (CGT,Income and IHT) sheltered environment and then invest in something liable to CGT and IHT and where the income can not be controlled and the asset it illiquid – it could easily back fire.

    Whilst (IMHO) BTL is suitable for many, the apparent blindness people seem to have as to the tax and cost implications of BTL is worryingly. Add to that the fact that the BTL market is significantly less regulated than the pension market and things could get very messy.

  2. I know I keep saying but if this isn’t an indication of the colossal bubble in London property prices and the almighty crash which is going to follow it, what else is! The fools!

  3. Anyone expecting to use their pension fund to purchase a BTL, is going to pay a lot of income tax on the funds they take out, then pay stamp duty and then be liable to CGT and IHT.

    The numbers don’t stack up.

  4. I agree with the three posters above.

    A fool and his (pension) money are easily parted.

    A good adviser should act like the naughty children with the emperor’s new clothes and point out they are naked.

  5. I understand the three houses in the picture are on the London property market for about £600,000 each.

    Anyone starting from the point that they want to buy a property in London is probably beyond help.

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