Property is a pension for private landlords as they intend to finance their retirement from their buy to let investments, according to new research.
The majority of landlords (80%) prefer funding their property businesses as long-term investments rather than putting their cash in to other assets.
And two out of three landlords (61%) intend to live off rents or cash lump sums generated from selling buy to let homes in their retirement, report market researchers BDRC Continental in a survey for the National Landlords Association.
The report found:
• One in five (20%) of landlords will rely on rents to supplement their state pensions
• 5% will live off cash lump sums from selling buy to let properties
• 40% of landlords are in two minds whether to sell up to fund their retirement and will decide depending on how the housing market performs
Nevertheless 10% of landlords have disposed of other assets to invest in property as they reckon buy to let will outperform other sectors in the long-term.
In support of their decision, they cited reasons like property producing a better income than other investments (19%); other investments showing a poor long-term capital appreciation (15%) and a viable alternative to a traditional pension (8%).
BDRC Continental director Mark Long said “Landlords consistently tell us that they see their property portfolio as forming a critical part of their pension provision for the future.
“On average, landlords intend to remain active in the rental sector for another 15 years or so, and see a combination of capital gains and rental income as underpinning their pension strategy.”
The North-West shows the best buy to let property yields at 7.1%, according to the UK’s largest letting agents LSL Property Services, who run rental chains like Reeds Rains and Your Move.
The average UK rental property yield is 6.2%, according the latest figures from LSL Property Services.
