Would You Buy-to-Let-to-Retire?

One in five over-55s are planning to buy-to-let-to-retire – a new trend that sees pension savers invest in their ideal retirement home now and rent it out until they retire – according to research from Prudential.

The pensions provider has discovered that more than half of pension savers plan to use some of their savings to purchase a retirement home for the future.

The firm says that the buy-to-let-to-retire trend appears to be defeating the traditional route of selling up and downsizing for retirement.

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Of those over-55s that already own a buy-to-let property, almost one in three (32%) said they have invested in order to secure a home to live in one day.

Would You Buy-to-Let-to-Retire?

Many of those considering a buy-to-let purchase will use the pension freedoms that were brought in in April 2015 to do so.

More than half (52%) of over-55s looking to buy-to-let-to retire said they would consider using a lump sum from their pension pots to fund all or part of their ideal retirement property.

Prudential’s study also found that some older people buy-to-let-to-bequeath. 17% of over-55s with existing buy-to-let properties said they invested in bricks and mortar so that they could hand down a property to a loved one in the future.

The research also revealed the popularity of investing in buy-to-let generally among older people.

Almost three in ten (29%) over-55s said they planned to make a buy-to-let purchase in the next two years. Of those hoping to invest, 70% would be joining the sector for the first time.

We have some useful guides full of information for landlords here: https://www.justlandlords.co.uk/news/guidelines/

A retirement expert at Prudential, Stan Russell, comments on the findings: “The advent of older people opting to buy-to-let-to-retire is an interesting development, and in a post-pension freedoms world, its appeal is understandable. However, there are a number of risks involved for anyone looking to take money from their pension savings, irrespective of the reasons.”

He explains: “Before making decisions that could reduce retirement income in the future, not to mention increase this year’s tax bill, it is important to make the most of the advice and guidance available. The Government’s Pension Wise service provides free and impartial guidance on accessing pension savings, while a professional financial adviser can help retirees navigate the pros and cons of using pension savings for property investment.

“The simplest approach for most people looking to give themselves choices and secure their ideal home when they retire is to save as much as possible into a pension, as early as possible in their working life.”1

Will you be joining this new phenomenon? If so, you can find all of the latest landlord updates, including finance options and legislation, at LandlordNews.co.uk.

1 https://www.landlordtoday.co.uk/breaking-news/2016/3/buy-to-let-to-retire-is-the-new-downsizing

 

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