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Buy-to-let: the love affair continues

The "love affair" between retirees and their buy-to-let properties is as strong as ever despite upcoming tax changes, new data suggests.

The proportion of pension savers looking to invest their tax-free cash lump sum into buy-to-let has held firm despite the looming tax clampdown, new data from Fidelity International shows.

From April, buy-to-let investors must pay an additional 3% stamp duty surcharge and higher-rate tax relief on mortgage interest will be phased out from April 2017.

Also, landlords will be able to claim less for wear and tear on their properties.

But the raft of impending changes has done little to dampen retirees’ enthusiasm for bricks and mortar, fund manager Fidelity International reports.

Some 7% of its retirement customers used their tax-free cash lump sum to invest in a rental property this January, the same proportion recorded in the last six months of 2015.

Property purchases were the third most popular use of tax-free pension cash in 2015, after reinvesting and topping up income.

Maike Currie, investment director for personal investing at Fidelity International, said: “The British love affair with all things property is well-documented and, for many retirees, buy-to-let is seen as a ‘no-brainer’ investment, given the spectacular rise in property markets, particularly in London, over recent years."

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