Easy access retirement savings could trigger a new buy to let pension boom as a third of retirement savers look to switch their cash from investments into property.
A new study suggest a third of pension savers aged between 45 and 64 years old would like to spend some or all of their savings on buy to let pensions rather than an annuity.
This could spark a run on property from April, when any pension saver over 55 years old can draw some or all of their pension savings and spend the cash how they wish.
The statistics come from a report drafted for landlord insurers Direct Line For Business.
The author, buy to let expert Kate Faulkner, said: “Buy-to-let is becoming an attractive option for people, especially while property and rents rise. It can deliver some great returns over 15-20 years.
“Given the recent pension access announcement, for some it could be good to diversify their investments when approaching retirement, but landlords need to seek expert advice to ensure they understand the returns that property can deliver and the tax implications.”
The survey revealed many pension investors believed property offered a better return on their cash:
- 43% were attracted by buy to let generating a regular income
- 22% felt their cash was more secure invested in property
- 17% believe property will increase in value faster than other assets
- 10% considered property as a lasting legacy for their families and loved ones
Prospective landlords believed property would give them a potential return on investment of between 10% and 14% a year.
Jazz Gakhal, Head of Direct Line for Business explained: “Prospective landlords should understand that buy-to-let does not come without financial risk.
“Legal expenses for repossessions and potential damage to property are but just a few of the costs that can take significant chunks out of annual yield.
“Taking the necessary precautions such as carrying out full reference checks on prospective tenants, inspecting your rental property regularly, and taking out landlord insurance can help to minimise some of the risks faced by landlords.”
— LandlordZONE (@LandlordZONE) January 6, 2015