New Age Pensioners: giving more control to over-55s.

The long-awaited and hotly-debated pension reforms have finally come into force today (6 April). Now, anyone over 55 years old will be allowed to choose what to do with their pensions; withdraw the total sum in one go, take small fixed amounts when they wish to, or choose to invest the funds in an annuity or elsewhere. The first 25% of the pension will be tax-free, although subsequent withdrawals will be taxed according to income tax bands.

There are the concerns over the level of control that over-55s will have over their money. Pensions minister, Steve Webb’s throwaway comment that over-55s could spend their pensions on Lamborghinis if they wanted, have exacerbating these concerns. But what is wrong with being able to choose what to do with our own, hard-earned money? Shouldn’t we be entitled to spend our cash on whatever we want? Besides, aren’t over-55s most likely to be considered with their money anyway? After all, they have already been diligently saving their pensions in the first place. If they wanted to spend it on designer sunglasses, bottles of Bollinger and sports cars (coincidentally the major components of a rapper’s music video), surely they would have done it by now?

Ipsos Mori recently surveyed 1247 adults aged 45-65 in the UK, and found that, out of those who are going to withdraw their money, 16% of respondents plan to invest their money in property. Fears about reckless spending are unsubstantiated, with this age group making smart decisions – saving, investing and treating themselves just a little.

It isn’t surprising that so many over-55s want to invest in property. The reasons for investing pensions in property are numerous and well known. Whereas most annuities will eventually cease to be paid, property will continue to return value until the asset is sold.

Rental yields may be relatively low in London (around 3-4%), but this is still attractive when compared to interest rates on savings accounts. Capital growth is still strong in London making it an attractive longer term investment location.

For those looking for better income over capital growth, it pays to look outside London. At the end of 2014, the average yield in Southampton was 8.73%. Manchester’s average yield stood at 7.98% followed by Nottingham in third spot with 7.67%.

Traditional auctions (not to be confused with conditional auctions) are the best way for cash buyers to purchase a property. The certainty and speed of transaction means that the risk of gazumping or a sale falling through is removed.

Cash buyers who would otherwise have their money earning 1% in a savings account while they wait for a property transaction to exchange can buy a house, exchange immediately and start benefitting from the property’s capital appreciation. With their newly available pension lump sum, over-55s are in a good position to buy at auction.

Online property auctions are a convenient way for over-55s to purchase property. For anyone thinking that over-55s are still in the analogue world, think again. In 2012, statistics collected by the Pew Research Centre found that half of those aged 65 and over are online and that 70% use the Internet on a daily basis. This figure is growing.

Social networking among users aged 50 and over are growing year on year. The number of sites aimed specifically at the over-50s are increasing and are varied, showing that more people of this generation are looking to the Internet as a convenient and accessible medium.

Margaret Maudsley, an 82 year old woman from Chorley and a self-confessed ‘silver surfer’, believes there are a “myriad of uses” for the Internet. She lists online banking, shopping, researching various products and booking train journeys as some of these uses, as well as researching her genealogy.

Bamboo Auctions (www.bambooauctions.com) offer the opportunity to view and purchase properties with ease, security and certainty. Buyers can search, download pre-prepared legal documents, arrange site viewings at specified open days and place bids on properties. Bids are placed online in real time and centralised auction lawyers are available to ensure exchange and completion occurs smoothly.

A study by McCarthy & Stone, a UK builder of retirement homes, surveyed over-60s about their Internet habits and found that 61% of respondents had bid on auction sites and 60% had searched for properties online. Online property auction sites like Bamboo Auctions point towards an exciting future for this generation, catering to the increased interest the over-60s have in online purchasing platforms and the greater freedom they have over their money.

 

Alex Evans

You May Also Enjoy

Breaking News

Popping the Asking Price Bubble

Where in the Uk Can Buyers Snap Up Property Bargains and Where Properties Go for a Premium Above Asking Price   New research from fast selling property company, Upstix has uncovered the UK’s most surprising postcodes for snapping up a property at bargain prices this year, highlighting a widening gap between sellers’ expectations and the…
Read More
Rightmove logo
Breaking News

Highest demand to lease office space since pre-pandemic

The latest insights from the UK’s number one commercial property website Rightmove, reveals that the number of unique enquiries to lease office space is at its highest point since pre-pandemic, as businesses look for spaces that meet modern requirements. Demand to lease office space is 19% higher than the same period a year ago and…
Read More
Planning disputes on new build land
Estate Agent Talk

Planning consultations for major infrastructure to be streamlined

Robert Bruce, a planning and infrastructure partner at law firm Freeths LLP, said he: “Welcomed the change as a significant step to speeding up the DCO process and the focus on the quality and effectiveness of the consultation, rather than box ticking and a risk averse approach to pre-application consultation due to the current legal…
Read More
Breaking News

‘The property ladder pulls further away’ warns Open Property Group

For many first-time buyers across England, the dream of homeownership continues to slip further out of reach. Despite rising wages, soaring house prices are making it harder than ever to get on the property ladder. A leading UK professional house buying company ‘Open Property Group’ based in Buckinghamshire UK, has raised concerns over the ongoing…
Read More
Estate Agent Talk

How Long It Takes to Buy a House in the UK: 5 Common Delays That Can Slow Down Your Home Purchase

Wondering how long it takes to buy a house in the UK? The average timeline ranges from 8 to 22 weeks, but even that can stretch significantly due to unexpected delays, especially if you’re a first-time buyer or caught in a chain. That’s why working with experienced professionals like Belvoir — one of the UK’s…
Read More
Love or Hate Rightmove
Breaking News

Rightmove to host Renters’ Rights Bill webinar with Guild of Lettings

Rightmove is hosting a live and interactive webinar session with the Guild of Lettings to help agents get Renters’ Rights Ready. The webinar will take place from 10:00am – 11:00am on Wednesday 23rd April. Susie Crolla, Managing Director for the Guild of Lettings, will be joining Rightmove to help agents with questions they may have about…
Read More