Landlords that have reached the state pension retirement age (65) are generating a net income of over £10bn, according to new research from the property consultancy Savills.
According to the latest findings from the English Private Landlord Survey, more than half (54%) of landlords in England are using buy-to-let properties as a “long-term investment to contribute to their pension”. Additional analysis from Savills reveals that retirement-age households own 1,491,000 buy-to let-properties worth an estimated £437 billion.
After deducting outstanding mortgage finance, these properties add £378bn to the net wealth of these households.
Despite tougher conditions for landlords, the use of property as a pension is only expected to grow. 1 in 10 (11%) of those approaching retirement expect that property will be their biggest source of retirement income. This increases to 1 in 5 (20%) among the self-employed.
And a further £346 billion worth to buy to let stock is held by households that are due to reach traditional retirement age in the next 10 years. As such, residential investment income is set to become an increasingly important contributor to pensioners income in the coming years.
“Buy to let investment has been an attractive way to supplement or build up retirement savings over the past 20 years, especially for the self-employed” says Lucian Cook, head of residential research at Savills.
“Many are proclaiming that the golden age of buy-to-let investment is over because of increased regulatory requirements, a higher tax burden and the prospect of further increases in the cost of debt. But it is set to play an increasingly important role in providing pension income, with many landlords, who were at the forefront of the buy-to-let explosion of the noughties, now hitting or approaching retirement age”.
“Older Landlords, in particular, have accumulated significant housing wealth through their investments. That means that they are in a good position to weather the storm as economic conditions toughen, being well insulated against interest rate rises.
“As a result , they will be an important source of private rented accommodation for younger households, especially as more heavily leveraged Landlords find it more difficult to make the sums add up.”