Up to 45% of over-40s ‘would consider’ buy-to-let to increase retirement income
More than one in five savers (21%) regret or are unsure about saving into pensions to fund retirement despite the launch of new pension freedoms, new research conducted for specialist mortgage lender Kensington shows.
The research among over-40s found strong support for saving into pension with 78% of retirement savers happy they have taken out pensions – but there is widespread disillusion with 15% of savers regretting their pension investments and 6% unsure.
However the research revealed growing interest in alternatives to pensions such as buy-to-let that increased flexibility on retirement savings are making potentially more attractive.
Around 53% of retirement savers say they would consider investing or are already investing in buy-to-let to increase their income in retirement. Nearly one in 12 (8%) of over-40s say they are already investing in buy-to-let while another 45% say they would consider it.
Pension freedoms allowing over-55s to take their defined contribution fund as cash subject to tax rates could be a major source of funds for buy-to-let, the research found. Around half of potential buy-to-let investors say they would use their pension fund to start as a landlord or to expand their portfolio.
Steve Griffiths, head of sales and distribution at Kensington, said: “The launch of pension freedoms has led to a lot of excited talk about the potential boost for buy-to-let with thousands of retired landlords rushing to set up in business.
“With so many people unhappy with pension saving there is a need for alternative approaches but buy-to-let will not be right for everyone and anyone planning to do so needs to get advice from a broker as well as advice on other issues including tax.
“The fact is buy-to-let is already a strong and growing market with more than 1.63 million mortgages worth around £188 billion representing around 14% of the total mortgage market and there is plenty of advice available as well as lenders willing to lend.”
The research shows the over-55s are slightly less likely consider investing in buy-to-let or are already doing so – around 48% would do so with 8% saying they are already landlords.