George Osborne’s pension reforms, to be introduced next year, will give pension holders the freedom to invest in an asset of their choice.

The research found that 42 per cent of pensioners will take a lump sum to buy a property or to pay off their mortgage while 13 per cent of pensioners said they will use a lump sum to pay off the balance on their own mortgage.

Over a quarter, 29 per cent, said they intended to purchase homes on a buy-to-let basis to generate rental income for their retirement.

Londoners were the most property-hungry, with almost half, 47 per cent, saying that they intended to purchase property with lump sums drawn from their pension.

But the findings revealed that fewer than 30 per cent understood how becoming a landlord would affect their finances in terms of income tax, capital gains tax or inheritance tax.

Mark Howell, commercial director at Bank of Ireland UK Mortgages, said: “Our research has identified a massive knowledge gap in the area of buy-to-let mortgages, which is particularly concerning as the market is currently experiencing growth.

“It’s important that people seek financial advice on tax matters before making big financial decisions or investments, like buying a property to let.”