Property market prepares for influx of 'silver landlords'

Agents report uptake in property interest ahead of new pension rules coming into effect next month

Rightmove has reported that buy to let investors who opt to cash in their pensions to boost their deposit funds could increase prices at the lower end of the market.

The firm also revealed that a wide array of letting agents have reported a major uplift in levels of interest in property ahead of the upcoming pension changes in April.

Estate agents have suggested that a rush for buy to let property investment could occur in April, although the degree of such a market surge is difficult to predict.

Beneficial loan rules aid buy to let prospects

One option of older investors would be to use some of their pension pot as deposit for a property while using a mortgage to fill the remaining gap.

Since most buy to let loans are not subject to tougher affordability roles which relate to normal mortgages and came into force in 2014, they can also be extended into retirement.

This could support the growth of the buy to let market, which is already reporting thriving figures.

Data from the Council of Mortgage Lenders claimed the sector expanded by 23 per cent last year while Direct Line for Business released figures in December which suggested almost one third of retirees would consider purchasing a buy to let property with their pension.

Interest in property opportunities

Rightmove Director Miles Shipside reported that agents were experiencing a “high level of interest” from new landlords – particularly those of retirement age looking at buy to let prospects.

“With the highest returns for the lowest investment being at the lower end of the market, the first time buyer property sector will be the greatest recipient of any increase in demand from investors with substantial pension pots,” he explained.

Many of the properties favoured by investors at the lower end of the market are in short supply in some areas as competition among mortgage lenders is so high, Shipside explained.

“Some cash-rich pension pot buy to let investors will also be tempted by those tax-deductible mortgage rates, creating further upwards price pressure in a market sector that is already out-stripping the higher-priced ones,” he added.

Investors considering using their pension pots as an option must also consider their tax liabilities to see if such a deal is worthwhile.