Are Southampton retirees raiding their pensions for buy 2 let?

Downsizing has fallen out of favour with older homeowners, with more and more purchasing their dream retirement property and then renting it out until they are ready to move in.

According to research released today by Prudential, 20 per cent of over-55s would consider making a buy to let investment with the intention of living in it themselves one day, while a third (32 per cent) of those who already have a buy to let property are thinking about moving into it sometime in the future.

However, when asked how they intended to fund their purchase, around half (52 per cent) said they would take a lump sum from their pension.

"The advent of older people opting to buy-to-let-to-retire is an interesting development, and in a post-pension freedoms world its appeal is understandable," said Stan Russell, a retirement expert at Prudential. "However, there are a number of risks involved for anyone looking to take money from their pension savings, irrespective of the reasons."

Since the pension freedoms came into force last April, those aged 55 or over are able to withdraw money from their pensions pot without first purchasing an annuity.

Russell continued: "The simplest approach for most people looking to give themselves choices and secure their ideal home when they retire is to save as much as possible into a pension as early as possible in their working life."

From 1 April this year, an additional three per cent will be charged on stamp duty land tax (SDLT) for those purchasing a buy to let property. The new charge was announced in last November's Autumn Statement.

Government launched a consultation into the new higher rate of SDLT in December last year and is currently analysing the feedback it received.

http://www.cityam.com/235948/uk-housing-market-retirees-turning-their-backs-on-downsizing-in-favour-of-buy-to-let-investing-but-theyre-raiding-their-pensions-to-afford-it