A new assessment on buy-to-let investment has revealed that retirees are still looking to purchase in the sector.
Data from a report by Fidelity International indicates that retirees putting tax free cash from their pensions into buy-to-let has remained constant during the last year. This is despite the forthcoming tax changes.
Alterations
On April 6th 2016, a buy-to-let investor will be permitted to pay an extra 3% stamp duty in comparison to residential buyers. In addition, higher-rate tax relief on mortgage interest will be cut from April 2017, to the basic rate of 20%. As such, landlords will be able to claim less for wear and tear suffered in their properties.
However, these changes have done little to dispel retirees’ appetite for buy-to-let investment. Fidelity International said that 7% of their retirement customers used their tax-free money to invest in a rental property during January. This was the same proportion seen in the last six months of 2015.
In all, property purchases remain popular with retirees, making up 14% of all usages of tax-free pension money during 2015. This percentage has typically been split 50/50 between buy-to-let and owner-occupier purchases.
Retirees still investing in buy-to-let
‘No Brainer’
‘The British love affair with all things property is well-documented and for many retirees, buy-to-let is seen as a no brainer investment given the spectacular rise in property markets, particularly in London, over recent years,’ noted Maike Currie, investment director for personal investing at Fidelity International. ‘Tax changes aside, the illiquidity of the housing market as well as costs in the way of maintenance, stamp duty, mortgage arrangement fees and a host of unpredictable outgoings can chip away at income. Not to mention the time and effort required to manage a property and the risk that it may lie empty between tenancies,’ she continued.[1]
‘Investing in property funds allows investors access to an income stream without the hard work and unexpected costs of a tangible property. Buy-to-let in retirement may work for some but with the added extras that come with it, it’s worth asking yourself whether you really want to be managing a property in your eighties?’ Currie concluded.[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/retirees-love-affair-with-buy-to-let-continues