Pension Changes – A Boon For Agents?
January 22, 2015
With legislation enabling us to draw down our pensions in one lump sum coming into effect from April this year, letting agents should expect the market to be flooded by a wealth of new buy to let landlords from the silver sector. And this dad’s army of mature new landlords are set to offer high street estate agents a golden opportunity.
Vastly different from the portfolio property player, who may have multiple properties under his belt, those who choose to cash in their pension pot for property are smaller scale investors more likely to purchase a single house or flat. But there may be thousands of them.
Of the estimated 200,000 intending to cash in their lump sum this year alone, 32,000 are planning to buy property, according to research by Ipsos Mori, meaning that those buying on the smaller scale will still make a big impact. And experts predict these figures will rise.
While the traditional buy to let landlord may be playing a high stakes game of property monopoly, those who are trading their pensions for property are doing so because they want to make an investment that’s as safe as… well, houses. And with interest rates on savings likely to stay low long term, getting into letting may be the best way for them to make their money work for them.
These new entrants to the rental market from the older generation could be just the rental market needs to rejuvenate, as their hands off approach lends itself to the complete service the traditional letting agent offers. Rather than just relying on an agent to find them a tenant, we predict they will be keen to have their properties managed as well, as well as being open to any other value add options their estate agent can offer them.
As relative newcomers to the property game, they also recognise that they will benefit from any additional insider advice on both buying and letting that an experienced agent can offer.
Likely to treat their new buy to let properties as an alternative type of piggy bank, those pouring their pensions into bricks and mortar will be seeking a slow but steady return on the property they’ve purchased, as well as hoping that its value will increase, as their mortgage decreases.
Remember, however, buying a house at any age is a huge investment and never more so than when you’re sinking the savings for your retirement into it. Estate agents should be prepared for a little extra hand holding for this new market entrant, but also be reassured that for them – like the very clients they’re handling, if they manage the situation well – the returns could be huge.
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