Chancellor George Osborne has presented fifty somethings with a golden opportunity to live the dream – and buy their own picture postcard B&B or small hotel, according to Colliers International hotels expert Simon Wells.
He said last week’s surprise budget announcement giving people easier access to their pension pots could open up a world of opportunity for would be hoteliers across the country.
“The chancellor’s decision to allow people to draw down a part or all of their pension pot without being heavily penalised by HMRC has set even more people thinking about a mid-lifer career switch.
“Running a B&B has always been a favourite retirement option. What the budget announcement has done is bring this opportunity within the grasp of people in their early to mid-fifties who had been big pension savers but up until now didn’t have the necessary cash to buy into their dream.
“A whole new group of entrepreneurial individuals will now be able to invest in property for the first time and enjoy a fabulous work-life combination in addition to maybe earning a better return on their capital than simply buying an annuity. It really is a win win scenario.”
Colliers International has already reported significant uplift in the hospitality market and last week’s announcement is likely to add further stimulus to the already fast-recovering sector.
Latest figures show hotel transactions across the UK as a whole leapt 66 per cent to £800m in the second half of 2013. Nationally, Colliers International had its best year since 2008 and was involved in selling or acquiring more than 100 UK hotels with a combined value of approximately £700 million.
Hotspots like The Lake District, The Cotswolds, The New Forest and along the South West’s fabulous coastline continue to attract plenty of interest and the Bristol-based hotels team have opportunities throughout the region as do their colleagues across the country.
Simon commented: “All these locations are ideal for a B&B or small hotel, not just in business terms but as a place to live. And thanks to the Chancellor’s announcement, it’s going to be a fantastic way to have an alternative to an ‘institutional’ retirement.”
Finance specialist Hugh Caven of Walbrook Commercial Finance - a mortgage broker who has worked with buyers acquiring from Colliers International for many years – believes last week’s announcement is one of the most exciting things to come out of a budget in his lifetime.
“It’s clear the budget announcement has unlocked many people’s imaginations and early retirement will become a reality for many who only had the prospect of plodding through work and topping up the pension pot in return for a modest income.
“They are being encouraged to take life by the scruff of the neck and I put myself in that category too.”
He went on: “We are waiting for the detail, but it seems fairly certain that freeing up pension cash will enable more people than ever to make a mid-life switch now rather than wait until their mid- sixties or early seventies.”
Hugh said that while some people might simply cash in their pension to buy a Ferrari or go on a cruise, most will be looking at other forms of investment as an alternative to the traditional annuity.
“The shame is that at this moment the government does not appear to have relaxed the SIPP conditions that currently virtually preclude the use of a SIPP to buy a small hospitality business where it is also to be the family home”.
“If the pension changes announced are genuinely meant to give the investor access to their hard saved cash, rather than a very clever tax raising exercise, then it would be a small step to amend the current SIPP rulings.”
“If faced with an either or scenario I think that many people would opt to retain control over their money but leave it in a financial vehicle that would be growing with contributions from the business. Then, when they truly want to retire, sell the business and hopefully have an even larger pot to blow on that Ferrari.”
Simon Wells concluded: “Whichever way buyers choose to proceed, people are excited by the chance to take closer control of what is after all their own money. With 12 months to go before the rule change there is some time to do some thinking, go and see a few businesses and line up the ducks in time for the 2015 season. It will come round faster than you think.”