New figures appear to show that younger people may prefer investing in property over pensions - giving new hope to the beleaguered buy to let sector.
Data from buy to let mortgage broker Commercial Trust shows that two age demographics - those aged 20 to 29 years old and those aged 30 to 39 - have been the only ones to record continued year-on-year market share growth for buy to let purchase applications since 2015.
Conversely, since 2015, there has been a decline in the proportion of applications from people aged 60 or over.
“The figures suggest that younger people can see the value in investing in bricks and mortar – and perhaps this is an indicator that they perceive property investment as a sounder investment than pensions in the longer term,” comments Andrew Turner, chief executive at Commercial Trust Limited.
“What is also interesting from these statistics is that rather than seeing an increase in buy to let applications from people reaching retirement age, we have seen a fall in market share from 2015 to 2017” he adds.
Three years ago there was a flurry of publicity surrounding so-called Pension Freedoms, where people with a defined contribution were allowed to take up to 25 per of their investment as a tax free lump sum and were compelled to purchase annuities with the remaining 75 per cent.
Pension Freedoms allowed people to use their entire fund as they wished, with speculation that this would lead to a surge in the number of buy to let investments from retirees, looking to receive rental income and potentially capital growth, to fund their retirement.
“Whilst Commercial Trust saw an initial burst of application activity from the over 60s in 2015, this has not been sustained through the two subsequent calendar years. Since 2015, the market share for this demographic has fallen from 25 per cent to 18.8 per cent for 2017” according to Turner.
“The biggest market share continues to come from those aged 40 to 49 years old, with three years of consistent application activity, which consistently accounts for just under a third of all purchase applications and has seen just a 0.8 per cent fluctuation over the past three full years.”