Britain is headed towards a generation of retiree landlords, according to a new report. Many are said to be taking advantage of new, relaxed pension rules and see property investment as their best bet for cash returns.
Research from the Office for National Statistics saw a study of 20,000 households, which suggested the proportion of pensioners planning to invest in the buy-to-let market is steadily growing.
The survey found that 42% of respondents considered property investment as their best way of creating the largest retirement fund. Many experts predict that buyers in their forties or fifties plan to live off the rental income for many years. They are concerned that the survey, coupled with changes to pension rules, points towards a, ‘nation of older landlords.’
David Lawrenson of buy-to-let consultancy Lettingfocus.com, said, ‘a generation of people of people in their forties and upwards have seen house prices increase almost every year from 1989 and so many see property as a good, safe bet. On top of that, the ability to claim tax breaks on mortgage interest and other expenses is also very appealing, and many are finding they can easily use equity in their residential property or money from a pension pot to fund a deposit.’
Britain facing generation of retiree landlords
Figures show that the number of buy-to-let loans available has risen substantially by 15% over two months since the pension reforms took hold. The total number now stands at around 700. Nearly £1bn has been withdrawn from pensions so for, by around 60,000 people.
‘It’s highly likely that some of this money has been accessed with buy-to-let in mind, ‘commented Charlotte Nelson of data analyst Moneyfacts. ‘Savings rates are currently so poor that many are looking elsewhere to fund their retirement,’ she added.
Mr Lawrenson also observed that due to relaxed rules, it is now, ‘relatively easy,’ for would-be investors to qualify for loans and rates as low as 1.95%.
Private landlords currently own around one in five homes, with critics arguing that this surge in buy-to-let activity is driving property prices up and expanding the housing shortage towards the bottom of the property ladder.
Betsy Dillner, director of Generation Rent, observed that, ‘for every landlord building up a nest egg, there is at least one household for whom high rents are making it harder to save for the future.’