NLA concerned about number of people investing for retirement

It has been suggested that the recent alterations to the way that buy-to-let properties in the UK are taxed could lead to a pension crisis, with individuals becoming too reliant on property to fund their retirement.

The National Landlords Association warns that 77% of landlords, equating to roughly 1.8 million, are reliant on their buy-to-let investment in order to fund their retirement.

Retirement Planning

Findings from recent consumer market research from Mintel indicate that buy-to-let is still a safe way to save for retirement years, with 68% of people of this opinion.

This said, figures from the Office for National Statistics suggest that the average retired household spends £21,770 each year. This leaves a shortfall of over £15,000 after taking the full basic state pension of £6,359.60 into consideration.

In order for this shortfall to be made up, one would require savings of around £300,000. The National Landlords Association feel that this is why so many people are turning to property.

Richard Lambert, Chief Executive Officer of the National Landlords Association, observed: ‘As a consequence of government policy over recent decades almost two million people are reliant on their property to fund their later years. But the changing tax regime will substantially reduce the income they receive from these investments and so compromise the retirement plans of a significant number of hard working people.’[1]

Retiree Landlords

Mr Lambert went on to say: ‘Some 27% of UK landlords are already retired and 37% are aged 55 or over, so there is a pressing need to tackle these issues without delay.’[1]

As a result, the National Landlords Association is calling on the Government to assist those affected to adjust their financial plans by tapering the total amount of capital gains tax landlords pay when selling their property. This, the NLA hopes, will be based on how long they have owned and let their property out for.

Lambert explained: ‘Landlords who have invested in residential property for the long term are different from short term speculators who buy and develop properties, and this should be recognised when it comes to how much capital gains tax they pay when they decide to sell.’[1]

‘It is not always in the best interests for landlords to continue to manage residential property into later life. A capital gains relief like we propose would provide an incentive to sell, allowing people to sell poorly performing properties and potentially purchase an annuity or invest in more liquid, lower risk assets to fund their retirement instead,’ he concluded.[1]

[1] http://www.propertywire.com/news/uk/uk-landlords-body-voices-concerned-number-relying-buy-let-retirement/