Has George Osbourne launched Pension billions into the PRS?Make Text Bigger
I hear that the Chancellor has changed rules on pensions today. From April 2015 the over-55s will be able to do what they like with their funds. With the demise of Annuities surely there will be a rush into property. What will be the impact?
Here are 2 quotes from the BBC web coverage:
“A massive reform of pensions has been announced by the government which will change the way many people fund their retirement.”
“The government is consulting on the rules which will apply from 6 April, 2015, but it is expected that you will be able to take your entire DC pension savings as a lump sum and spend or invest it as you like, as long as you are over 55. “
I don’t know much about Annuities but it seems that rates can be less than 3% if you choose to have your payments rise with inflation. Then the money is lost after you die. Not an attractive scheme. In contrast buying an unremarkable property to let should yield about 6% gross and say 4 to 5% net after costs and voids etc. Rents are vaguely inflation proof and the asset is retained by your estate.
I’m sure these numbers can be challenged and there will be regional variation on the property side. However, the picture would appear to show a large influx of new landlords.
Do you agree with this analysis? What impact will it have on the Private Rented Sector? Will the first time buyers get squeezed out even more?
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