Landlords that have reached the state pension retirement age of 65 are generating a net income of over £10 billion according to new research from Savills.
The agency has analysed the latest findings from the English Private Landlord Survey, which shows that 54 per cent 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.
Despite tougher conditions for landlords, the use of property as a pension is only expected to grow according to the agency’s forecast.
Around 11 per cent of those approaching retirement expect that property will be their biggest source of retirement income. This increases to 20 per cent 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.”
