Warning on New Buy-to-let Rules
PEOPLE looking to use new rules to access pension funds to invest in buy-to-let properties have been warned of the risks by a local market expert. From April people will have greater freedom to unlock cash from pension pots, which could trigger a boom in buy-to-let investment.
Peter Johnson, who owns the Skipton office of residential letting specialist Belvoir, warned that such investment carries more risks than traditional pensions.
There is a groundswell of opinion that a considerable number of people will access their pension ‘pot’ to seek greater returns on their investments via buy-to-let – creating a new boom in the sector.
The market supply of buy to let may be boosted by the impact of this new reform, but we would advise caution because property rental income should not be viewed as a replacement for pension income.
The two are completely different.
Pension income tends to be low risk and index linked to rise with inflation while rental income typically does not. Sourcing a suitable buy-to-let mortgage as a first-time landlord (especially at a later stage in life) could also prove difficult.
To find out more about Buy-to-let investing download our series our guides on this sector.