Pension reforms offer children a chance
These new rules affecting the pension market have meant that The Buying Agents has received a record number of enquiries from parents wishing to buy starter homes with their pension funds for their children in a tax efficient and cost effective manner.
Henry Sherwood, managing director of The Buying Agents, said that parents are better off giving children their inheritance as soon as possible in the form of a property rather than risk being priced out of the market in future.
He said: “Historically London property doubles in value every seven to ten years, as per a recent case study of ours, where the property in question experienced an increase in growth of 119% in 4.25 years.
“If a parent bought their child a £500k property today, in 20 years, it could potentially be worth between £1m and £1.5m.
“Alternatively, if they didn’t buy and the child inherited the £500k in 20 years, they would then need an average salary of around £330k p/a to be able to afford to buy the same property.
“Our advice to parents is to take full advantage of the new pension rules to help secure their children a place on the property ladder.
“Given the average UK life expectancy of 79.5 years for men and 82.5 years for woman, potential inheritance could be re-invested for 25 years (or the term of an average mortgage) which is certainly the best approach to take if this is something you are seriously considering.”