Britain’s soaring house prices look like they’re here to stay as new pension rules mean old people are able to withdraw their pension cash early and flood the buy-to-let market.
Interest rates are at a record low (just 0.5%) and traditional savings aren’t delivering decent returns. The UK government is now also allowing baby-boomers to withdraw part of their pensions in one cash lump sum, and this is leading to the older generation investing in property on a wider scale.
While it might be great for the pensioners, who look more towards property to bulk up their available cash in their retirement, it’s bad news for their grandkids who will be priced out of a home.
According to a study from YouGov and investment adviser, Old Mutual Wealth, 11% of those approaching retirement plan to snap up a second home to rent out. This is compared to 6% of old people that rely on this form of income to keep afloat.
Office for National Statistics (ONS) data shows that the average price of a home in the UK can set you back £271,000 at the moment. Prices in London are now 90% higher than they were just over a decade ago.
The UK government is trying to get as many first time buyers onto the market as possible.
At the end of last year, Prime Minister David Cameron revealed that many looking to get on the housing ladder will not only benefit from the Help to Buy Scheme, which only requires a 5% deposit, but young people will be able to snap up a certain amount of new homes at a 20% discount.