Retirement Funded by Property Investments Could be Jeopardised

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Buy to let investors reliant on property to fund their retirement could face a ‘pension black hole’ as a result of increasing regulation.

Three quarters of the UK’s private landlords who invested in property solely to fund their retirement are currently considering selling their properties if additional costs levied on the sector begin to narrow their margins.

A number of changes to regulation have impacted the buy to let sector in recent years, including the phasing out of mortgage interest tax relief and increasingly tough criteria becoming placed upon portfolio landlords with four or more properties.

According to research from MakeUrMove, older landlords are disproportionately affected as they do not have sufficient time to make changes before they need to rely on their properties for a retirement income. Landlords aged over 55 were most concerned about making too small a profit on their investment.

In addition, smaller, casual landlords will be most impacted by the rising costs of managing properties. 38 per cent of this type of landlord said retirement was their biggest concern.

Managing director of MakeUrMove, Alexandra Morris, explained: ‘The problem impacts landlords with a buy to let mortgage the most severely, as these additional overheads, combined with recent changes to the private rental sector, mean smaller landlords hoping for a steady income in retirement are worrying that their properties won’t even cover their own costs.’

Eileen Cooper, a landlord with two properties, had been relying on her investments to fund her retirement. She said: ‘We planned to buy another property once the mortgages on our current rental properties are paid off, however we have now decided against this due to the new laws and regulations brought in by the Government, along with the ongoing changes to the tax system, which make it much less viable as a long-term investment. Due to the changes in law and regulation, the time required to manage the properties isn’t worth it.’