Posted on 29/05/2018 14:02:24   by  

Are pensioners taking over the buy-to-let market?

The recent changes to this year’s Budget made by Chancellor George Osborne has allowed savers to take all their pension cash at retirement. As of April 2015, pensioners will be able to decide how and when they spend their hard earned cash.

Mixing this with a number of cheaper mortgage deals available on the market it is no surprise we are now seeing an influx of pensioners entering into the buy-to-let property market.  Over the past months the banks have seen a significant increase in buy-to-let borrowing from older workers and Savills estate agents are predicting that ‘the Chancellor’s reforms could see an extra £10bn annual boost if just one in five well-off pensioners decide to invest 10per cent of their pension pots in buy-to-let’. Could this be the pensioner take over?

An article written by This Is Money has highlighted the number of older workers, those aged 50-60 ‘snapping up rental properties in order to boost their income in retirement’. With the Bank of England base rate set to remain low for the next two years it brings a level of uncertainty around pension’s growth and as a result Investors are looking at alternative investments that deliver higher returns. This Is Money reports that according to data firm Moneyfacts, ‘buy-to-let offers an average return of 5.1per cent - but as high as 8per cent in popular areas, compared to the average two-year fixed-rate savings bond paying just 1.75per cent’. Therefore, many are investing large deposits of money into rental properties with the hopes that they will be able to live off the rental money that is produced from the property; thus creating a cushty little nest egg for them to enjoy during retirement.

It was also announced in the budget that P2P lending would qualify for inclusion in ISAs, meaning consumers can invest up to £15,000 every year via P2P lending platforms without paying tax on any gains. The annuity changes are likely to increase the number of pensioners choosing property over annuities to deliver both an income and return.

Are we now living in a market where it is a case of move over youngsters, the ‘silver landlords’ are taking over?

Well it doesn’t have to be. We think there is room for everyone to invest in and benefit from UK buy-to-let property, whether you are a pensioner, mother or young professional. And we think there should be more choices available, to more people. That’s why we are looking at two sides, you can become a LandLord and be the one to source and manage the properties for others to invest in or you can simply be an Investor, where you choose the properties you wish to invest in which are managed by others. The choice you make may depend on the time you have available, the amount you have to invest or your experience and expertise of the Buy-to-let market. And what’s more, you won’t require a mortgage.

Either way, we think it’s about time pensioners and everybody else had more freedom to choose how and when they spend their money.

Read This Is Money article to read the full story on pensioner landlords.