Trend in letting out your home
One in five over 55s are considering buying their ideal retirement home now and letting it out until they retire.
New research has identified a trend of ‘buy-to-let-to-retire’ among people over 55.
According to the results of the study carried out by Prudential, a leading provider of pension saving and retirement income solutions, one in five ( 20 per cent) over- 55s are considering buying their ideal retirement property now but letting it out until they are ready to move in when they retire.
The trend of ‘buy-to-let-to-retire’ appears to be challenging the traditional route of simply selling up and downsizing as a one-off property deal on retirement.
Of those over-55s who have already made a buy-to-let investment, nearly one in three (32 per cent) said they had done so to secure a property to live in one day.
Many of those looking to buy their ideal home for retirement will exploit the changes to pension regulations that came into force in April 2015.
More than half ( 52 per cent) of over-55s looking to ‘buy-to-let-to- retire’ said they would consider using a lump sum from their pension savings to fund all or part of the purchase of their ideal retirement property.
Meanwhile, Prudential’s research also found that some older people ‘buy-to-let-to-bequeath’.
Just over one in six (17 per cent) over- 55s with existing buy- to- let investments said they chose to invest in bricks and mortar so they could hand down a property to a loved one in the future.
The findings also highlight the popularity of buy-to-let generally among older people in the postpension freedoms world.
Nearly three in 10 (29 per cent) over-55s surveyed said they planned to make a buy-to-let investment in the next two years. Of those over-55s planning a buy-to-let investment, seven in 10 (70 per cent) said they would be investing in the sector for the first time.
Stan Russell, a retirement expert at Prudential, said: “The advent of older people opting to buy-to-let-to retire is an interesting development, and in a post-pension freedoms world its appeal is understandable.
“However, there are a number of risks involved for anyone looking to take money from their pension savings, irrespective of the reasons.
“The simplest approach for most people looking to give themselves choices and secure their ideal home when they retire is to save as much as possible into a pension as early as possible in their working life.
“The Government’s Pension Wise service provides free and impartial guidance.”