Britain is in the grip of a property shortage, and it could be about to get worse. New legislation means that from April many pensioners will be able to cash-in their pension pots, with many expected to invest in the buy to let market.
The market seems ill-prepared for such interest. Data from Rightmove, the property website, shows that over the last two years 31 per cent more transactions have been carried out, while only 11 per cent more houses have come onto the market. So the effect on the market of pensioners investing in buy to let properties could be to push prices further up as supply dwindles further.
Heightened demand could have a profound impact on best-buyer practices, as Miles Shipside, Rightmove director and housing market analyst, says:
More property could be effectively removed from the market when the buy-to-let sector sees a further boost from April, as agents are already reporting preliminary enquiries from retirees planning to cash in their pension pots and invest in buy-to-let properties to secure a steady inflation-proof retirement income.
Agents also report a reluctance among owner-occupiers to put their property up for sale, as they can see little suitable to buy, though in truth selling first (subject to contract) puts you in the best position to secure your next home.
Given that this is the likely shape of the market now and in the future, home owners need to get their tactics right for a successful tight-stock market move if those are the conditions in the area where they wish to buy.
The government’s pension plans have been criticised, with some fearing pension pots will be blown on unwise investments, leading to a greater burden on the welfare state when funds dry up.