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To think the govt's change to pensions is going to further fuel a boom in BTL housing

(33 Posts)
Thatballwasin Thu 20-Mar-14 22:46:24

Lots of lump sums will be enough to buy smaller properties or at least provide a good deposit. That's the next injection to house price growth sorted.

meditrina Thu 20-Mar-14 22:54:10

You'd need to buy outright, or it wouldn't make any sense to do it (because by pensionable age, you'd be unmortgageable). I suppose it would all,depend on whether rental yield would provide a better and equally high return as other possibilities. and can be adequately managed on their behalf should eh become incapacitated.

It might appeal to those who want to leave an asset to their DC (and also be popular with the DC who stand to inherit, even allowing for possible tax bill).

Mrsdavidcaruso Fri 21-Mar-14 09:27:08

And why shouldn't they,
pensioners have been right royally ripped off by the annuity companies for years. My dad is going through the process now he only has 60k ( so not enough to buy a house and deprive some poor FTB the chance of having it) if he didn't have family to help him he would not have a clue what to do and could find himself very badly off.

Most pensioners will use the providers who hold their 'pot' of money because they don't understand the process and I would defy anybody who is not a financial expert to understand the bumf we have been wading through this week, even though they will rarely get the best deal that way.

But to shop around for another provider is also difficult for older people many of them do not have access to the internet or do not understand
the process so they use a financial advisor who will charge a lot of money for the advice.

We have been using a comparison site from MA and have narrowed it down to a choice of 2 providers and his existing one, my Dad was on the phone for hours yesterday answering questions.

It really annoys me when this has been going on for years without being
looked at and regulated and the younger generation either have no idea this is happening or could not give a flying fuck about it as it does not affect them and besides the 'baby boomers' have shafted them so who cares.

Yet as soon as the regulations are set to change making it easier for people to get their OWN MONEY people are jumping up and down on boards like this and a couple of others about the fact that this MAY have an impact on them if the old fogies buy up all the properties leaving them nowt but ticcy tacky boxes on horrid estates to buy.

KhloeKardashian Fri 21-Mar-14 09:30:00

Some will buy small property to let, some won't. They will make updates to homes, go on holidays, join clubs, pay for cleaners, gardeners, carers, all sorts. It will generally fuel the economy.

HoleyGhost Fri 21-Mar-14 09:30:52

Yanbu, another way to increase the cost of housing

petalunicorn Fri 21-Mar-14 09:42:22

That was my first thought too - that they would invest in property. They wouldn't be unmortgageable surely with a Buy to Let mortgage? They would be paying off the loan with the income from the rent and running it as a business?

I don't disagree with this proposal in principle as why shouldn't people get access to their money but I think a lot will blow it and end up being baled out by the tax payer in their old age or they will give it to their kids to avoid inheritance tax. Either way it's just adding to the taxpayer burden in years to come.

Really the government should also be acting to help working age people as well: Serious incentives to employ and keep on young people, severe regulation of the rental market to allow people to make a proper home in a rented property (which would stop people playing at landlords as well as giving people more security of tenure) and working on implementing the living wage. It is a joke that so many public sector organisations do not pay the living wage for a start. I don't actually expect the current government to implement these, they are who they are after all but I am seriously disappointed that we don't hear concrete proposals in these areas from the Labour Party and it just shows how much even the Labour party are invested in the status quo of screwing the vulnerable.

specialsubject Fri 21-Mar-14 09:46:53

cobblers. The average pension pot is well under £100k.

'playing at landlords' - do tell how it is a game.
security of tenure is there by negotiation - the six month tenancy is a MINIMUM.

KhloeKardashian Fri 21-Mar-14 09:47:20

If they blow it on cleaners, builders, social activities, that helps the economy, it is their money let them enjoy their retirement.

Thymeout Fri 21-Mar-14 10:19:12

Khloe - what are they going to live on if they blow it on cleaners, builders etc?

The idea of a pension fund is that the interest from it provides an income. There has to be a financial return, or the pensioner will be living on the basic state pension - impossible without top-ups like hb or pension credits etc. Paid for out of the benefits pot which is already massively overspent.

KhloeKardashian Fri 21-Mar-14 10:39:53

They would be no different to someone in their thirties trying to keep up with the Jones's getting loan after loan then using their cb/ctc to pay the loans and using food banks, as per the example on a recent TV programme. They would be no different to someone who has no clue how to run a business and leaves a wake of debts whilst they go bankrupt. They will be no different to a Man who has an affair and takes family income to fund his affair. They would be no different to a bingo gambler, a drug addict, who has no care for anyone else reliant on their income or savings and is a spent thrift.

Some people only want to please themselves and to hell with the rest of us. The problem is not pensioners, it is why the hell do we all put up with knobheads as a society.

Mrsdavidcaruso Fri 21-Mar-14 10:45:53

Yes Thymeout but there has to be a better way to doing that then the current system I know all about this its happening to my Dad as we speak even my DH who has a job with the Navy handling complex documents could hardly understand the bumf we had to wade through over the weekend.

Thousands upon thousands of pensioners are sticking with the provider their pot is in because they don't know how to shop around even if they could get a better return somewhere else, others want to shop around but don't know how to so use a financial advisor who will charge them a large fee for the privilege.

Its about time pensioners were treated as adults and have a say in how they spend THEIR money

YouTheCat Fri 21-Mar-14 10:47:24

They are pushing up house prices and rents because half of the MPs are landlords.

Who'd have thought.

tb Fri 21-Mar-14 12:07:12

What I can't understand about it is the opposition's attitude. After all, John Prescott did just the same thing when they changed the rules by dramatically increasing the amount of cash people could take out of the Local Govt pension scheme on retirement, not sure if it applied to other schemes as well, but I can remembering thinking it was daft.

Being cynical, I just thought that was a way to bankrupt the scheme and give them an excuse to close it down (while protecting the mp's own scheme, of course).

For most people the amount of cash they have in their hands will be the lump sum on retirement, and for some, it will just get frittered away.

I can see some lovely 'aibu' threads 'when mil/fil/dm/df retired they gave us cash to pay off/reduce our mortgage, and now they want/need us to help them out. With the increase in disposable income each month, we did x,y,z and can't afford to help them. What would you do? It seems really unfair of them, we thought it was a gift......'

vickibee Fri 21-Mar-14 12:09:20

Locally you can buy a house for �50K, a 2 up 2 down terrace and get �400 per month rent, not sure if this would be better than a bank

Thatballwasin Fri 21-Mar-14 19:16:20

I'm not jumping up and down, I'm worried about how this is going to turn out. The beneficiaries here I think will shift from annuity providers to IFAs which is fine as long as it doesn't turn into another scam.

I wonder if it could be used to prevent houses being sold to pay for personal care on the event of someone going into a home. I have no idea about the details but if for instance I was about to go into a home and I'd paid off my mortgage, could I release some equity and gift it to my children. Then take my pension fund from where it had been invested up to that point, pay off the mortgage debt and rent out the house. The income stream from the house would have been partially funded from my pension pot and therefore is my pension income so surely I couldn't then be asked to sell the house to pay for personal care?

driving101 Fri 21-Mar-14 19:54:47

Certainly wouldn't be surprising if that was partly George Osborne's motivation, he has freely admitted that a further house price bubble would be a good thing as far as he is concerned.

I think its more about giving a short term kick to the economy with many pensioners withdrawing the lot and splurging it. I don't object to that in principle as its their money, as long as the inevitable demands from whiny pensioners for a bail out of how they've stupidly spent/lost/been conned out of their pension pot are ignored.

specialsubject Sat 22-Mar-14 13:26:12

I stand corrected. Just discovered that the average pension pot is £30k. That will buy lots of houses - if you are on a monopoly board.

FraidyCat Sat 22-Mar-14 13:37:07

I think a lot will blow it and end up being baled out by the tax payer in their old age

I think a small minority will blow it and then be entitled to exactly the same taxpayer support as people who never bothered to set their own money aside in the first place.

In general people who put thousands a year into a pension every year rather than blowing it on new cars and cruises are unlikely to change their habits when they retire, unless they've saved so much that they can afford to without risking running out of money.

driving101 Sat 22-Mar-14 14:57:23

Given that the average pension pot is only £30K, it stands to reason that most would-be pensioners are not very financially savvy and are quite likely to waste the money given the chance.

Mrsdavidcaruso did you really just imply that annuities are unregulated?!

Bowlersarm Sat 22-Mar-14 15:03:59

YANBU

As I understand it with btl, it's not about how much income you have to get a mortgage. It's whether the rental amount would cover the mortgage. So with a £30,000 deposit I would think it fairly easy for pensioners to buy a btl property without a salary.

specialsubject Sat 22-Mar-14 15:44:16

driving101 - everyone is a would-be pensioner, it's a lot better than the alternative. It is very difficult for most people to save the sums required.

bowlersarm - yes, it is about deposit, but if the property doesn't rent (or has a non-payer in it) then it will be repossessed if the owners can't pay the mortgage.People not in a position to cover 'voids' would be crazy to buy a rental property.

MoreBeta Sat 22-Mar-14 15:51:52

In my view this entire decision has been made to allow/force pensioners to pay down their debts to banks. A lot of pensioners have debt, used to fuel a lifestyle, pay for house extension, holiday, etc.

The release of the pension pots will allow banks to legitimately put a claim on them and lend against them. The big danger was pensioners were going to die owing a lot to banks and their houses would not be worth enough to pay it off.

Much more common situation than you might think.

I did wonder if this will essentially mean that for folk 55+ who aren't actually retired but have a pension pot, it might no longer be safe in bankruptcy. Hasn't been officially announced and at the moment pensions are protected but I could easily see that protection going if the pots are accessible

MoreBeta Sat 22-Mar-14 16:14:16

"....it might no longer be safe in bankruptcy.."

Absolutely. I have been saying since the beginning of the Financial Crisis that the only pot of money left is private pensions. They were tied up at the moment and could not be touched to pay down debt to banks. Now all of a sudden they can be used to pay off debts.

Just wait for the second great swindle. That will be forcing remaining pension pots to be invested in UK Government Gilts to fund the Government debt. It really is the last step in the process of financial repression. The banks really are not in any way 'mended' the Financial Crisis was just hidden. They tried to make it go away with QE (printing money) but the economy is still weak (except in London) and deflation is already happening across Europe.

This is serious.

The Government are after your pension - one way or another.

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