Pension freedom drives 53% into considering BTL

New research into the saving and investment habits of retirees has revealed that over half of those asked would consider venturing into the buy-to-let market to fund their retirement.

Related topics:  Landlords
Warren Lewis
16th April 2015
OAP

According to research conducted for specialist mortgage lender Kensington, 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,

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.

However over 55s are slightly less likely to consider investing in buy-to-let – around 48% would do so with 8% saying they are already landlords.

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, had this to say: “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.”

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