Landlords that have reached the state pension retirement age of 65 are generating a net income of over £10 billion according to new research from Savills.
The agency has analysed the latest findings from the English Private Landlord Survey, which shows that 54 per cent of landlords in England are using buy to let properties as a “long-term investment to contribute to their pension”.
Additional analysis from Savills reveals that retirement-age households own 1,491,000 buy to let properties worth an estimated £437 billion.
Despite tougher conditions for landlords, the use of property as a pension is only expected to grow according to the agency’s forecast.
Around 11 per cent of those approaching retirement expect that property will be their biggest source of retirement income. This increases to 20 per cent among the self-employed.
And a further £346 billion worth to buy to let stock is held by households that are due to reach traditional retirement age in the next 10 years. As such, residential investment income is set to become an increasingly important contributor to pensioners income in the coming years.
“Buy to let investment has been an attractive way to supplement or build up retirement savings over the past 20 years, especially for the self-employed” says Lucian Cook, head of residential research at Savills.
“Many are proclaiming that the golden age of buy-to-let investment is over because of increased regulatory requirements, a higher tax burden and the prospect of further increases in the cost of debt. But it is set to play an increasingly important role in providing pension income, with many landlords, who were at the forefront of the buy-to-let explosion of the noughties, now hitting or approaching retirement age.
“Older Landlords, in particular, have accumulated significant housing wealth through their investments. That means that they are in a good position to weather the storm as economic conditions toughen, being well insulated against interest rate rises.
“As a result they will be an important source of private rented accommodation for younger households, especially as more heavily leveraged Landlords find it more difficult to make the sums add up.”
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This article is kind of stating the obvious.
BTL was by far the most sensible pension idea for the self employed for decades as it meant money was both invested and accessible should the business require it. Traditional pensions were hard to get involved with if you had fluctuations in turnover and profits from year to year.
Most of the recent tax changes such as Section 24 and the extra 3% SDLT are a major barrier to younger people becoming landlords.
Section 24 artificially inflates taxable income by including mortgage expenses as income and pushes young people out of Child Benefit territory.
A fairly common starting point for second generation landlords was to be part owner of parents BTLs. Nowadays that would stuff up the younger person's FTB options and ability to pay normal SDLT on their first home.
The super high rates of CGT have meant some of us are holding on to properties later in life than we had originally planned to. Time will tell if having predominantly gereatric landlords is a good idea.
Anyone know what actually happens to the tenant when a landlord dies in harness?
I took over my father's tenanted property when he died somewhat unexpectedly. The tenancies just continued by law. However, I could have served Section 21 notices when it was legal to do so. I didn't do that. The tenants stayed until they wished to leave - one bought a new flat in London, and another moved back home to the countryside because it was the pandemic and she no longer needed to go into work.
The tenancies were part of the estate and the tenants were legally obliged to continue paying rent even though the landlord/my father had died.
Not sure I agree. I am retired and I will be selling up 1 property in April, then another the following April. Both 3 bedroom houses that are currently housing a family with children. The new energy requirements will be too expensive on older Victorian terrace properties to get to a C level. I have already had additional loft insulation, have boiler less than 5 years old, double glazing windows and doors, individual radiator thermostats, LCD lighting in every room, but without a cavity in wall I would need internal cavity wall work costing £8,200 on one house and £9k on the other. Just to get 2 or 3 additional points to get into C band. Seems like too big an outlay so I'll be selling up 2 of my properties. I have 6 more but they are at C standard now. Still have not decided whether to sell 1 house a year, give money to my children to pay towards paying off their mortgages. The thought of having to go to court if I want to get my property back is not appealing.
In my area, the amount is chopped at around £3000.
An Energy assessor told me this.
If you need to spend anything more, then the property is exempt.
You can also put insulation boards on the outside and that will up the rating.
I have a similar property to yours and I was told that it would be exempt,. because the cost would be a lot more than the level set.
Wendy - Ditto, maybe a few years ago the article was more accurate, but now … not so sure. I had planned on keeping my properties when I retire, but if the planned EPC C comes in… the lot will be gone.
I started buying in the late 80s, in my mid 30s, as a pension scheme, I had been plagued by spivs trying to stich me up with pension schemes, it has worked perfectly for me, I gave up the day job at 54 and became a full time landlord, now at 69 I'm still fit and healthy doing my own repairs, upgrades and decorating , but what does the future hold ? I don't want to sell anything, but having said that it's looking, with this white paper and EPC C, likely that I'm being pushed into a corner and the only sensible thing to do will be to start selling one per year, that'll take me to age 85 so will likely see me out
At 69, I was still doing repairs and refurbishments. Now at 76 it's not so easy anymore and I contract out on my remaining properties. Soon to be rid of.
Sensible Andrew- we don’t live forever, may as well enjoy it.
I used to do a lot of the repair work myself, but now I get someone else to do it.
I have a farm with lots of other buildings to maintain, so I haven't got the time or the inclination to do it.
I have had some of my properties re-done with silicone render to cut down on the maintenance, also, everything is double glazed and facias etc are capped with UPVC.
I had no intention of selling and wanted to pass onto my children. I have been on interest only mortgages, but have paid down some of my mortgages, but not enough. In hindsight I should have charged more rent, i guess. Therefore with the rising interest rates, even though still low, i'm getting close to break even point with the S24 tax swindle on some of my properties. I still work part time and also have my RAF pension. I am looking at selling 4-5 properties in next 6 months, then converting a large property into 3 flats, waiting for the lenders approval, and will go into my retirement with less properties but smaller mortgages. I fail to see how this has levelled up anybody's situation. I have good tenants that will have to move home and I will have less to pass onto my children.
Therefore congrats to the government as i've been levelled.
Most of us seem to be fairly elderly on here and could probably do without all the hassle of renting out properties.
After all, 'there are no pockets in shrouds'.
I am coming to the conclusion that you may as well spend it, as you don't know how much longer you have left.
If you give it away to your children you have to survive for 7 years, otherwise they will have to pay tax on it, so it may be prudent to start offloading before you get too old?
Agree John, all this attack seems be on Old Age Pensioner’s who created the Business, guided & maintained through the decades since its formation now ripe for acquisition by the big boys, so hit us now while we are still here and hit them again after we have gone, no such problem’s for Institutions, Companies or the new boys on the block like General Accident, Lloyds Bank or John Lewis etc to take over from us with Favouritism.
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