Pension changes boost buy to let market

One third of retirees could become ‘silver landlords’ as pension changes increase interest in the buy to let market, research has revealed

According to data collected on behalf of Direct Line for Business, 32 per cent of retirement savers are considering using all or part of their pension to purchase a property with the intention of renting it out.

This will provide an alternative form of income to that of an annuity and has become a more popular proposition following recent changes to pension regulations in the UK.

Investment security

According to their poll, Direct Line for Business found that investment security was one of the biggest drivers behind retirees’ decision to engage with the buy to let market.

Capital appreciation was also considered important by 17 per cent of respondents while 43 per cent of those aged over 45 years old named regular income as their main reason for considering buy to let.

A further 23 per cent saw this form of investment as the most secure or safe while nine per cent were encouraged to consider buy to let opportunities out of a desire to invest in something that would leave an
inheritance for their children and other dependents.

Only six per cent of those questioned said they were considering buy to let investments because they didn’t want an annuity.

Strong yields

For those currently approaching retirement, strong yields from property investments can also be expected if they choose this form of investment.

On average, they could receive as much as 13 per cent on their buy to let investment with Jazz Gakhal – Direct Line for Business’ Head – explaining that it offers a “flexible investment” that can offer an “immediate source of income as well as being a long term asset”.

While it is important for prospective landlords to be aware of the legal expenses and repair costs that could affect annual returns, recent changes to pension regulations are expected to prompt growth in the number of ‘silver landlords’ this coming April as retirees seek better value for money from their pension pots.

See how other new regulations and laws have affected the Buy to Let market with an article on the Overhaul of Stamp Duty.

 

31st December 2014