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BUDGET: Scrapping lifetime pension fund limit 'will reduce BTL investment'

pensions cornerstone david hannah

Despite new research showing that one in four people plan to invest in property to generate retirement income, Chancellor Jeremy Hunt's scrapping of the 'lifetime pension fund limit' could dampen demand for BTL property, says Cornerstone Tax.

The impact of inflation on savings and pensions has made the BTL sector more appealing to potential investors in recent years - despite many fed-up landlords looking to sell due to increasing legislation and rising costs.

Nationwide statistics show that the average UK house price has grown from �175,826 in 2013 to �258,297 this year - a 47% increase.

With potentially costly changes to EPC rules, forcing many landlords to pay out thousands for energy efficiency improvements, group chairman David Hannah (main picture) advises investors to buy property which is less than five years old to limit the amount of extra work needed.

He adds: 'If you have the investment available, it would be valuable to buy a property with as little borrowing as possible to avoid high mortgage rates. It'�s also crucial that you get a good tenant. If you have a problematic tenant, it can cost you thousands in legal costs and refurbishments.'�

lifetime allowance

However, following Chancellor Jeremy Hunt'�s announcement that the lifetime allowance on pension funds would be scrapped, Hannah says this could have a knock-on effect on the buy-to-let market.

'Many people who were subject to this limit previously went out and invested capital in the private rental sector, because that was the only way to guarantee topping up their income, which otherwise would have been inadequate in retirement,'� he explains. 

'Now, individuals will have more options in terms of where they want to invest their pension, which could make buy-to-let investing less desirable.'�


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