Buy-to-let boom is coming to an end

Fewer people are looking to invest in buy-to-let property as new regulations and a cooler market deter prospective property investors.  

A new study has uncovered a decline in the proportion of people willing to become new buy-to-let landlords, or to downsize, in order to boost their retirement income.

The research, conducted by Retirement Advantage, asked people how likely they are to consider buying a new property in order to rent it out, to provide them with retirement income.

Just 35% of respondents said they were likely to consider it, with 62% saying they were unlikely to. This is a pronounced departure from the almost even 49-51% split recorded this time last year.

The shift is even more pronounced for over 55s, with 10% saying they would enter buy-to-let versus 87% saying they would not – compared with 27% and 73% respectively last year.

However, despite the drop in appetite over the last year, just 20% of existing landlords say they are likely to sell their property and move to a smaller one when they retire, down from 26% last year. Among over-55s it has fallen from 22% to only 16%.

Alice Watson, head of product and marketing at Retirement Advantage, said: “The reduced appetite for entering Buy-to-Let is no doubt a reaction to new stamp duty surcharges on investment properties, and the gradual removal of mortgage tax relief. However, predictions of Buy-to-Let’s demise would be premature. There are still nearly a million landlords over 55 and for those landlords, there are innovative new mortgage options available to increase ways to boost income from investment properties.

“At the same time, we know that downsizing is becoming less popular, not least because the fees associated with selling up and moving can be much higher than expected.

“Property can still play a significant role in providing retirement income, though. Indeed, there is a pressing need for it to do so, as pensions and other savings are increasingly unlikely to meet many people’s retirement expectations on their own. There is a real opportunity for advisers to help clients understand other ways property wealth can be accessed – routes which mean clients can stay in their home and still pass them on to next of kin.”

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