Pensions - Articles - Pensions to purchase buy-to-let, not viable, warns IFA


The buy-to-let market is unlikely to be flooded with people emptying their pension pots, says Portal Financial, one of the UK's largest retirement specialists.

 It is already possible to remove 25% of a pension as a tax-free lump sum, and when the pension freedoms take effect in April any further withdrawals will be taxable. A pension fund large enough to finance a property is likely to be in the higher-rate tax bracket of 40%, and possibly as much as 45%.
  
 Portal Financial's own research found that just 9% of people were sure they wanted to empty their pension fund, of which 5% planned to invest in buy-to-let compared to 34% who would use the money to tackle the mortgage or other debts.
  
 Jamie Smith-Thompson, managing director of Portal Financial, says:
 "Repeated warnings about an inevitable influx of pensioners to the buy-to-let market make good headlines but it is unlikely to happen because it does not make financial sense. There will be tax implications of withdrawing over 25% of the pension, and few people are likely to willingly surrender up to 45% to the taxman - the gains from property would need to be huge just to recoup that loss. They will also need to think about costs of insurance, maintenance and repairs, as well as having no income when the property is between tenants, not to mention the risk of having their retirement fund in one asset.”
  

Back to Index


Similar News to this Story

Further comments on DWP Small Pots Consolidation report
Broadstone, Hymans Robertson, Scottish Widows and Now Pensions comment on the DWP announcement on consolidating small pension pots
Pensions over taxation bill continues to climb
Brits reclaimed £44 million in overtaxation on pension withdrawals in January, February and March 2025, the latest HMRC figures reveal. Over 15,000 re
Responses to DWPs Small Pots Delivery Group report
Standard Life, LCP and Aegon comment on the DWPs Small Pots Delivery Group report with proposed legislative programme outlined in meaning that pots wo

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.