Property is pension for private landlords

Private landlords see their buy to let properties as retirement savings and plan to live off the income generated from their investments.

Around 80% of landlords see property as a safer haven for their money than pensions or other long-term investments, according to a study for the National Landlords Association by market research firm BDRC Continental.

And nearly two thirds (61%) expect to live off the rents.

A fifth of landlords relying on a buy to let property pension intend to sell some of the homes they own, 5% will sell them all, while 40% will take a view on selling depending on the housing market at the time.

The survey also revealed around 10% of landlords had sold other investments to purchase property outright because they considered buy to let returns gave a better yield.

Other reasons to invest in buy to let include:

  • Generating income (19%)
  • Long term investment to set off poor pension performance (15%)
  • An alternative to mainstream investments (8%)
  • A safer bet than other investments, like equities (6%)

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.”

Other recent reports show letting to students gives a better return than standard buy to let homes rented by a family.

Global property consultants CBRE highlighted yields of 10% – 15% for student housing, compared with average figures of around 6.2% for buy to lets.

Yields are highest in the North-West at 7.1%, says leading letting chain LSL Property Services, who run the Reeds Rains and Your Move chains, although rents are lower than many other regions.

Increasing rents and high house prices in London are diluting yields, while lower house prices in the regions with average rents around the £550 a month mark are generating better returns.

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