The pension reforms introduced by George Osborne could cost £5 billion and push house prices up in the long term, according to the Office for Budget Responsibility (OBR).

The report examined the projected economic effects of a range of the ex-chancellor’s reforms, including the pension freedoms and savings products such as the Help to Buy ISA.

The effect these reforms could collectively have on the public finances are:

  • the initial effect will be positive with a peak gain of £2.3 billion in 2018/19
  • the effect turns negative in 2021/22
  • the net cost continues to rise, eventually reaching £5 billion in 2034/35.

Expressed as a share of GDP, the net costs in 2034/35 represent 0.1% of GDP. If that rate of growth were to continue at a steady pace, the OBR estimates the cost would be 3.7% of GDP to public sector net debt over 50 years.

 

Pension reforms – effect on house prices

One of the main effects highlighted in the report is the impact on the housing market. The OBR estimates that the measures will lead to increased demand which in turn will put upward pressure on prices.

Key estimates:

  • pension flexibility and restrictions to the annual and lifetime allowances may divert money into housing, which, given a relatively fixed supply, would lead to higher prices
  • the Lifetime ISA and Help to Buy ISA are estimated to add 0.3% to house prices by 2020/21.

PKB Accountants can help with a range of financial issues.  So if you’re looking for financial advice, please contact us.

 

If you are looking for an accountant to assist you with your business, please get in touch.  We would be pleased to help you.  Read our recent Case Studies to find out how PKB Accountants have helped other businesses like yours.

 


By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close