Tuesday, Feb 10, 2015

Wave of retirees entering BTL market will push home ownership further out of reach for young buyers

Telegraph: Pensioner landlords could drive up house prices for first-time buyers

A new generation of pensioner landlords is expected to flood the buy-to-let market, pushing up house prices for first-time buyers, as more people turn to property to fund their retirement.
The study showed that 11pc of those approaching retirement plan to buy a second home to rent out, compared to the 6pc of pensioners who currently rely on this form of income.
Annuity reforms which come into effect in April, allowing baby-boomers to withdraw their pension in one lump cash sum, are expected to fuel a wave of purchases of one and two bedroom flats to rent.

Posted by debtserf @ 01:14 PM (3741 views)
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10 Comments

1. khards said...

They may plan to buy a BTL to let out, but when they see the yield and expenses involved they will baulk. Might be a few areas left with positive cashflow, but I don't know of them.

Tuesday, February 10, 2015 02:05PM Report Comment
 

2. Markyh said...

To do this they will pay a shed load of tax which I would think will wipe out posistive terms for many years. Assuming a modest 2-3 bed house costs £200k to buy, even the minimum 25% BTL deposit of £50k will mean a tax bill of £41k to take out of a Pension in one year. £91k -45% TAX = £50k net. To remove the whole £200k in one hit means a £163.5k tax bill.

They could drip it out @ the 20% tax rate over several years, but even the £50k deposit would take ages to get hold of without paying over 20% tax.

M

Tuesday, February 10, 2015 02:38PM Report Comment
 

3. debtserf said...

A blue-rinse BTL tsunami is highly unlikely given the financial repression of the last 6+ years, Uncanny how those hardworking pensioners seem to be getting higher yield bonds just a few months before the election. After years of being royally shafted.

If pent-up demand from OAPs is being touted as the thing to keep prices aloft, then the outlook must be very dire.

Tuesday, February 10, 2015 03:17PM Report Comment
 

4. taffee said...

Think a lot will find even a small amount of interest useful....should be able to get 3% on £100k...pay your
Council tax and gives a bit of control

Tuesday, February 10, 2015 03:36PM Report Comment
 

5. hpwatcher said...

They may plan to buy a BTL to let out, but when they see the yield and expenses involved they will baulk.

Indeed. I know someone with two properties and they cautioned me against even considering it. Too little reward, lots of hassle and bother, and that's if it goes right.

Tuesday, February 10, 2015 03:43PM Report Comment
 

6. hpwatcher said...

If pent-up demand from OAPs is being touted as the thing to keep prices aloft, then the outlook must be very dire.

Why would they want to hassle at that time of life?

Tuesday, February 10, 2015 03:44PM Report Comment
 

7. sneaker said...

They might compete at the lower end of the market but as far as the top-end (of oligarch-grade properties) goes, we've run out of billionaires.

Tuesday, February 10, 2015 04:40PM Report Comment
 

8. khards said...

Also, what happens when the pensioner has to go into a home or dies two weeks into your 12 month contract?

Tuesday, February 10, 2015 05:50PM Report Comment
 

9. britishblue said...

Many pensioners with money are concerned about long term care. The cost of a standard care home in London is £1500 to £2000 a week.
Plus many have experienced property crashes before.

Tuesday, February 10, 2015 06:07PM Report Comment
 

10. Minorproblem said...

Doesn't make sense, most pensioners retiring at the moment will have the majority of their pension in a final salary pension (they may have 10-15 years in other pension products).

It won't make sense for them to buy property. Most would keep their final salary pension as these are quite generous; the best way to handle any superannuation is to leave them invested and do a draw down (effectively the same as an annuity but if you die early your family gets something back at least).

Unless you have a massive pension saved I don't know why you would put it in property as you can get good end of life superannuation funds that give you a nice draw down and give you very similar yields with no hassle, you can even transfer part of your fund into property related units if that floats your boat.

Tuesday, February 10, 2015 10:16PM Report Comment
 

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