Buy-to-let boom is driven by retirees
Monday 25 September 2017
Despite recent tax changes and new regulations due to come into force, the buy-to-let sector continues to boom, with the number of mortgages at a 10-year high and rates at record lows.
Pension freedoms have given retirees the chance to spend their pension pots as they see fit, and it seems that many people are withdrawing their cash and investing in rental properties.
Industry specialist Retirement Advantage predicts that the over-50s will continue to help keep the BTL market buoyant, with 13 per cent of those aged 50+ saying that they're likely to invest in property after they retire, which could create an estimated 1.3m landlords in the years ahead.
The prospect of being able to build capital thanks to rising house prices and securing regular income from rent is motivating 50 per cent of those surveyed.
Others are keen to boost their income in retirement (44 per cent), while 36 per cent think that property is a safer place for their money than investing in the stock market.
Another 22 per cent have already enjoyed but-to-let success so want to build on that with further purchases, and 18 per cent said they would enjoy the process of being a landlord.
"The BTL market looks set for a boom fuelled by the pension freedoms and in the process will create a new generation of landlords," said Andrew Tully, pensions technical director at Retirement Advantage.
"As a nation our interest in property remains, despite a cooling of the BTL market following the tax changes."
However, he warns people to think ‘long and hard before withdrawing significant sums of cash from their pension, as any withdrawal over the first 25 per cent is subject to income tax.’
"As ever, seeking professional financial advice is key to avoid potential bear traps and make the most of the pension freedoms," he said.
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