The rise of the silver landlord

Steve Coyle, operations director at Cullen Property, Edinburgh, discusses the rising trend of silver landlords.

Steve Coyle
20th October 2015
silver

As the famous adage goes “every cloud has a silver lining”, and since April 2015 (Pension Freedom Day) people have been able to spend their pensions as they wish. As they are no longer forced to convert their pension pots into annuities, some of those reaching retirement age are opting to invest in property instead.

Nationwide lends to investors up to 70 years of age, with a maximum loan term of 35 years, meaning the investor can theoretically now be a buy-to-let (BTL) landlord up to the age of 105!

A recent survey by Platinum Property Partners revealed that a third of those heading for retirement are considering purchasing a buy-to-let property or properties. Interestingly, we saw increased interest in Edinburgh property from more mature investors at this year’s Property Investor & Homebuyer Show, held in London, where we met over 400 property investors over the two-day event.

Many people we spoke to already had links to Edinburgh, having either studied here themselves or because their children are studying here, and our discussions often focused on their expectations of the Edinburgh property market, particularly compared with London where many investors are now priced out of the market entirely. More experienced property investors are interested in securing not just a buy-to-let flat but a long-term home for their children, and even grandchildren. 

A number of grandparents are investing in properties for their grandchildren to live in whilst studying at university. Successful student towns, like Edinburgh, Glasgow and Manchester, are becoming big business, where increasing demand for housing means high rental yields as well as capital appreciation.  Moreover, some silver investors are downscaling the size of the property they currently live in, and are using the money towards a portfolio of buy-to-let properties and relying on rent from these properties to fund their retirement.

It appears, that traditional bricks and mortar and rental income is viewed as a safer and better bet than a savings account.
 
So what is the typical mature property investor looking for and why might they invest?  They ideally look for something they like the look of, in a settled and established area, which can be let without the risk of voids, can produce a 5.0 – 8.0% gross rental yield, and which is likely to do relatively well in terms of capital growth in a growing market.  

In other words, they want quality, stability, longevity and low risk, but reasonable reward.  The reason they might invest is evident from the low bank deposit rates or annuity rates which are on offer at the moment and don’t look likely to increase anytime soon.

With affordable prices, interesting properties with period features, recession resistant rents in a mid-size European city and such a high quality of life, Edinburgh property is an obvious and safe choice for silver landlords.

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