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Three in ten over-55s will invest in buy-to-let

Wednesday 09 March 2016

Pensioners could help give the buy-to-let market a much-needed boost in the midst of George Osborne's looming reforms.

A new study by Prudential has found that three in every ten over-55s will invest in second homes in the next two years.

It comes despite Osborne's unpopular plans to hike up stamp duty from April, which many say could be a catalyst for a market crash. 

Ironically, it is thanks to Osborne's other reforms over pension freedom that will see many use their savings to buy the homes.

It could also mean Osborne's intentions backfire, with the reforms aimed at removing private landlords to encourage more young people to buy their first homes.

In what Prudential is calling a 'buy-to-let-to-retire' trend, it is a far cry from the retire and downsize approach that many often take. 

Prudential's Stan Russell described the move as an 'interesting development' adding: "In a post-pension freedoms world its appeal is understandable."

However, he says the move is not without risk, such as reducing retirement income in the future and increasing their tax bills.

Despite this, the move is certain to give the buy-to-let second-home sector a timely boost as an industry preoccupied with Osborne's proposed changes. 

Buy-to-let tax changes could lead to soaring rents 

With less than a month before the increase in stamp duty is introduced, the criticism and short-sightedness of the plans continues to baffle everyone from homeowners themselves to fellow MPs and market experts. 

With many threatening to ditch their second homes in protest at the changes, some say it could lead to rents being hiked up as the number of rental properties is dramatically reduced and could send demand into overdrive.

Having to pay more rent could scupper young people's aims hopes of saving for a house, therefore defeating Osborne's initial purpose.

It's something that the chancellor clearly hasn't quite got to grips with yet.

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