Pension reforms may push up house prices

Experts have warned that there could be some unintended consequences for the housing market as as pensioners could invest their pension pots in the property market. From April 2015 pensioners will have more control over how they invest in their futures and could turn to the property market. Industry experts are concerned that the property market is already spiraling out of control and this could be pouring fuel onto a fire that is already burning out of control.

The other argument however is that pensioners have been ripped off for too long with annuity policies and the high charges associated with these financial products. There have been some reports over the weekend that house prices could rise by a staggering 30% over the next couple of years because of the demand for buy to let properties.

It is too early to say what the impact on house prices will be but the current number of annuities that are taken out each year is 420,000 with a value of £15bn. This number is due to be slashed by a third as retirees shop around and are not forced to take out this product which often pays a low level of interest each year.

It is great news for pensioners who can do what they want with their money and not be ripped off by an insurance company. Because of the liberalization of the pensions market house prices will almost certainly come under more pressure with the increased number of buyers.