Can I transfer my Pension funds and buy a house?

Pal

Alarm bells: Early retirement/pension transfers/investing in a single asset (esp. rented to students!)/property price collapse etc etc

My main concern was that you were going to cash your pension in to buy a holiday home. ;D

Be very careful if you are going to get a BTL, even if it is for your daughter. Do not let the fact that you daughter is going to live in it for 3-4 years (possibly less) dictate the decision. The investment has to make sense by itself. After all house prices, having risen steadily for 10 years, MIGHT fall steadily for the next 10, when you might be looking at retiring.

dunstonh

Do you know if this scheme will DEFINITELY be launched in April 2006?

No. It was intended to be April 2005 but was put back. It could be put back again but its unlikely. The proposals are still under discussion so changes are possible.

Also I'd far rather have my pension tied up in property than in some badly performing pension fund

Change your pension fund(s) if you dont like the risk that goes with them. If its stockmarket backed then remember we have had a major stockmarket decline so things would be lower. Indeed, one could consider that now is a good time to be paying money in rather than taking it out. Otherwise look at lower risk funds like commercial property, gilts and fixed interest.

Echoing Pal a bit here but its worth doing. The housing market can drop by as much as the stockmarket and when it happens next time, there is a good chance it will be bigger than the last time as there are far more buy to lets where people have borrowed more than they should. The average medium risk stockmarket funds are back to break even or back in profit again following the stockmarket drop. It took much longer for the housing market to recover in the past.

Buy to Lets are just as risky as the stockmarket. Indeed, many would consider them more risky as the knock on effect means you can lose more than just the Buy to let property.

Pegleg2001

AFAIAA when buying residential property from Apr 2006 you can only borrow 50% of the value of the value. For example, if your pension pot "deposit" is £75,000 then you can only borrow £75,000 on top.

Also, you cannot benefit 'free' from the property. For example, if you bought a holiday home you would have to pay market rate rental for your own use or be liable pay a 'benefit in kind' tax charge. This logic will probably apply to property for university children too. At least the money is paid to yourself versus a landlord though - so it stays 'in the family' so-to-speak'.

Rules should come out in the coming months but methinks this one is going to be difficult to police for Gordon Brown.