Landlords see buy-to-lets as retirement fund

More landlords see buy-to-let properties as their retirement fund, with most planning to supplement their pensions from property.

A study by landlord mortgage firm BM Solutions shows that an increasing number of landlords are turning to the private rental market to ensure they have enough money for retirement.

Of the single property and portfolio landlords questioned 84% view their buy-to-let houses as a supplementary pension income. Of these landlords, six out of 10 are actively planning to live off their rental income when they retire.

A further four in 10 who say their property is their pension will make their final decision about keeping or disposing of their investments when they reach retirement, depending on the state of the market at that time.

Few landlords say they will sell all their buy-to-let properties when they retire.

Property as pension

Phil Rickards, head of sales at BM Solutions, says the findings show that the private rental sector is still a long-term investment for landlords and this is not likely to change.

The research does reveal a slight fall in rental yields, but they still remain at high levels, he adds.
Rental yields fell by 0.5% to 6.2% in the final quarter of 2012, which is the same yield for the end of 2011. The East Midlands was the strongest performing region with an average return of 7.1%.
Landlords in Yorkshire and Humberside saw the lowest yields at 4.6%.

The number of tenants in arrears dropped in the last three months of the year, with an average 2.4 tenants behind with their rent payments, compared to 3.3 tenants in the third quarter. The proportion of landlords facing rental arrears was down to the lowest level since the second quarter of 2010. However, the average amount owed per tenant was up £247 to £2,613.

Void periods fell to their lowest level for more than a year thanks to strong and consistent demand from tenants. Just a third of landlords faced void periods in the final quarter, a 13% decrease over the same period the previous year.

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