Many home owners in the UK over the age of 55 are not intending to stay put with 37% planning at least one more move, new research has found.
Indeed, overall they are planning more than three million future listing purchases worth a total of more than £775 billion, the data from insurance firm Prudential shows.
However, contrary to some predictions, this does not seem to signal an explosion in listing deals fuelled directly by the new pension freedoms. Only 14% say their plans have come about as a result of the pension rule changes and just one in 10 think the changes make them more likely to buy a listing in the future.
The research results show that investing in listing is something that remains popular with the over 55s with 18% of those planning a listing deal say they will not be buying a home to live in, but will be buying second homes, buy to let listings, development listings or homes for their relatives.
Prudential’s research also reveals the scale of the listing deals being considered by the over 55s. The average maximum purchase price for their next listing is over £250,000 while 20% say they are willing to spend £350,000 or more.
Some 83% who are planning a listing deal, say that their planned purchase is likely to be their last. However, not all of the older listing dealers will be last time buyers as 11% say they will probably buy again in the future.
‘There was a lot of speculation that the pension freedoms would spark a rush of over 55s investing in buy to let listing as a means of generating income in retirement. However our research suggests that this hasn’t yet been the case,’ said Stan Russell, retirement expert at Prudential.
‘In fact the process of withdrawing cash from a pension fund to purchase listing and potentially generate an income is complex and could result in a large tax bill. Anyone aged 50 or over with a defined contribution pension is entitled to free and impartial guidance from the Government’s Pension Wise service, and many of those considering accessing their retirement savings under the new freedoms would benefit from a consultation with a financial adviser,’ he explained.
The results of Prudential’s research also show that the biggest motivation for over 55s planning a listing deal is to downsize with 43% giving this as a reason.
‘Using money raised from a listing sale could prove to be a helpful boost to retirement income for some. But it’s no substitute for starting to save as early as possible to prepare for eventual retirement,’ said Russell.
There is an almost equal split between those who expect to buy a listing that’s more expensive than their current home, and those who plan to buy a cheaper listing and bank some cash. Around 29% expect to spend more on their next listing while 27% say they’ll spend less.
The research shows that 33% over 55s who are re-entering the listing market are doing so to move somewhere more suitable for older people and 21% are doing it to live in a quieter area.
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Source: Property News Spain