According to an independent survey commissioned by Charcol, 29% of people would prefer to put their retirement into property or a personal savings plan, rather than invest in a pension.
The research supports recent figures from the Council of Mortgage Lenders (CML) that show buy-to-let mortgages have increased from 24,700 loans with a value of £2.1bn in the second half of last year to 27,900 loans worth £2.5bn in the first half of this year.
Ray Boulger, senior technical manager at Charcol, said the trend of using property investment to fund retirement has been growing over the past few years.
‘For advisory clients we do a fact-finding exercise to establish their intentions and that is a question we pose. People started looking at buy-to-let as a form of retirement investment a few years ago,’ he said.
Boulger added that the spur for this growth appears to be the lowering of annuity rates, with growing resentment among those customers forced to invest 75% of a pension fund in what is increasingly seen as a poor investment.
‘Nobody really quibbled when annuity rates were good, but once the rates fell, it became more of an issue and people progressively came to resent it. This is now compounded by stock market uncertainty and so on ‘ a number of people now have less confidence in insurance companies’ ability to deliver the goods,’ he said.
But John Heron, managing director of lender Paragon, took issue with the CML figures.
‘I think there is a strong caveat to these statistics because monitoring of this class of product is new ‘ five or six years ago nobody collected any statistics. Over recent years, new lenders have made these products available and others have only recently differentiated them in their mortgage book. What is seen as an increasing trend may be exaggerated as people join the statistical pool,’ he said.
