Results from a survey of industry bodies has revealed that buy-to-let will be the main use of equity release for the over-55s in the next few years.
The Chancellor George Osborne’s pension reforms, introduced earlier in the year, allowed the over-55s to withdraw their full pension and had the freedom to use as they wish. This meant that many had done as was expected and invested in buy-to-let property.
The research, completed by Equiniti’s Annual Retirement Survey, which asked a range of retirement planning consultants and other industry bodies, has highlighted that 82% agreed that allowing the older demographic to release their equity will lead to more of those from the older demographic becoming amateur landlords.
For many it’s a great opportunity to generate income and potentially make capital gains in the longer term as house prices continue to rocket.
Nigel Pearce, Life and Pensions Director comments, “equity release looks certain to be a key part of retirement and long-term care financing.”
However, those considering putting their savings to good use need to know the pitfalls too. The primary concern should be the hefty tax bill which you could face if you withdraw all or the majority of your pension. This could easily propel you into the higher 40% tax band, which is before you even think about finding the right property and tenants.