Buy-to-let properties a 'pension' for landlords
Landlords view their portfolio of buy-to-let properties as an important aspect of their pension planning, with income from this source accounting for a major part of their expected post-retirement income.
That is according to a new survey by the National Landlords Association (NLA), which indicated that 81 per cent of landlords expect they will be relying on their UK property investment to help boost their finances once they have stopped working.
The finding comes as figures from the Department of Work and Pensions suggest that less people than ever are saving money in a conventional pension scheme. In fact, the last ten years have seen an eight percentage point drop in the number of savers contributing to a pension, from 46 per cent to 38 per cent of the British workforce.
With this in mind, it is hardly surprising that many people are looking to identify new revenue streams to supplement their later years. Buy-to-let properties come with the strong bonus of offering both a regular income, in the form of rent, and a lump sum if the property is sold at a later date.
David Salusbury, chairman of the NLA, said: "Landlord confidence in the financial markets is at an all-time low. This combined with record low interest rates means that many individuals are looking for alternative ways to secure their financial future.
“Private-residential property can be a sound long-term investment for those planning their retirement. But potential landlords must realise that letting property is a lot more complicated than contributing to a pension."
Numerous reports suggest that rental yields are recovering from the recent housing market slump, making now a good time to invest. Yields are calculated by taking your annual monthly rental return and dividing this by the value of the property, then multiplying by 100 to get a percentage.
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