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Are Pension Changes Good or Bad for the Local Property Market?

Mon 11 May 2015

Nick Millinchip, a Phipps & Pritchard with McCartneys LLP Partner, and based at Stourport Office, comments as follows:-

“As ever this depends on whether you are a buyer or a seller but, at this moment in time, it’s too soon to yet tell if there will be a major effect locally.”


From 6 April this year, if you are over the age of 55 and have a defined contribution Pension Scheme, for example a private pension, you may be able to take the whole ‘pot’ as a lump sum, albeit with some tax implications. One possible resulting scenario is that some individuals with smaller funds might choose to cash in that money to try and help their children to get on the property ladder and with good reason as follows:-


First time buyers are still having a hard time of it due to affordability issues and market data proves just that.

According to the National Association of Estate Agents (NAEA), home buyers aged 18-30 make up just 3% of the market. The Halifax claims that in the early months of this year mortgage lending to first time buyers plunged by a huge 27%!


The other effect of the new pension Legislation could be that some pension spenders might just simply become first time investors in property themselves, which would most probably give a better return for the average person compared to their pension annuities.


Nick concludes – “albeit perhaps obvious this ‘new money’ will inevitability lift prices if people move en-mass but, as already touched upon, it is currently too soon for the local effect to be felt.  However what can be said is that the Wyre Forest District does “stack up” for investors given that a wide selection of properties can be bought for circa £100,000 (one hundred thousand pounds) which might then translate to a rental income of £500 (five hundred pounds) per month or £6,000 (six thousand pounds) per year, net, giving a net yield of 6%”


Instead some people might just go out and buy a Lamborghini in which case I can’t help but would love to come along for a ride!

For general estate agency advice on either purchase or sale Nick Millinchip can be contacted on 01299 822060 or by e.mail: 

NB: Please note that the information above is for guidance only and in no way should be construed as pension/financial advice.  Instead specialist Independent Assessment should be sought.

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