For Younger Landlords, Property is Pension

With the recent hubbub surrounding the new pension freedoms that came into effect last week, leading to lots of speculation over whether it will cause a surge in over 55s diving head first into the buy-to-let market, the thoughts of younger landlords on property and pensions have flown under the radar.

New research by an online letting agent shows that for 70% of landlords under 55, their only pension fund is their property portfolio. The same study showed that buy-to-let assets form part of the pension provision for only one in five landlords.

More than a third of landlords say their mortgages will be paid off before they retire, and only 6% intend to sell their properties after they retire.

28% of landlords were found to have plans to expand their portfolios this year. Over a third of landlords were using a letting agent to help manage their properties.

It is not surprising that most younger landlords are comfortable with their properties being their sole pension fund in view of new research by Landbay. They found that every £1,000 invested in an average buy-to-let property purchased with a 75% loan-to-value mortgage in Q4 1996 would have grown to £14,897 by Q4 2014. This equates to a compound annual return of 16.2%.

The average returns on buy-to-let, it is claimed, have outperformed all other major asset classes over the last 18 years.

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