Member Article

Think carefully about pension changes says property expert

LEADING South Yorkshire mortgage broker Daniel Bailey says forthcoming changes in pension laws could provide a major boost to the housing market.

Daniel, the founder and owner of Middleton Finance, says he is already seeing an increase in the number of enquiries from people interested in taking some money from their pension pot for investment into the buy-to-let market once pension legislation is relaxed in April.

“Some people have become disillusioned with the way their pensions are performing and are therefore looking at other ways of topping up their retirement income,” he said.

“The new pension rules come into force in April and I do anticipate an even greater increase in enquiries based on the way things have been over the past few months.”

The changes mean that, depending on the type of pension involved, people will now be able to take money from their pension pot when they reach 55 – with 25 per cent tax-free.

The remaining 75 per cent can be taken as an annuity, as a flexible income or the whole amount can be completely withdrawn.

“Many people will find the idea of being able to access money from their pension very attractive,” Daniel said.

“But you have to remember that anything withdrawn beyond the 25 per cent threshold will be taxed at a marginal rate and also you have to think about the future and how you want to live, not simply seeing this as a short term answer to financial issues.

“Property is one of the key areas that many people will be thinking of investing in but the sensible thing to do is to seek advice before taking action.

“I personally welcome the changes because I think they give people more options but investing in property and the buy-to-let market is not going to be right for everybody.

“You have to remember that investing in property means there is no guaranteed income or rate of return and there are also things like maintenance, rental voids and agent costs to factor in too.

“You have to be committed to the idea of developing a property portfolio and that is why it is so important to seek the correct advice before making any final decision.”

For further information visit www.middletonfinance.co.uk or follow Daniel on Twitter @mortgagedanny

This was posted in Bdaily's Members' News section by John Highfield .