Buy-to-let investors shrug off tax crackdown

The popularity of buy-to-let looks set to defy Chancellor George Osborne's tax crackdown with nearly three out of 10 over-55s planning to invest in the next two years.

Of these, 70% said they would be investing in the sector for the first time, according to new research from Prudential.

Ironically, the trend is being driven by Osborne's pension freedom reforms, with just over half planning to raid their pension pots to buy property.

The insurer has also identified a new trend, which it has named “buy-to-let-to-retire”.

One in five over 55s say they are considering buying their ideal retirement home now and letting it out until they retire.

Prudential said this is challenging the traditional route of simply selling up and downsizing on retirement. 

Of those who have already made a buy-to-let investment, nearly one in three said they did so to secure a property to live in one day.

The research also found that 17% of older people ‘buy-to-let-to-bequeath’, investing in bricks and mortar to hand down a property to a loved one in future.

Stan Russell, retirement expert at Prudential, said the appeal of buy-to-let-to retire is understandable in a post-pension freedoms world.

But he warned that taking money from your pension savings can be risky, even if you plan to re-invest it.

“Before making decisions that could reduce retirement income in the future, not to mention increase this year’s tax bill, it is important to make the most of the advice and guidance available.”