With 6 April 2015 marked as Pension Freedom Day there has been a significant amount of speculation that individuals will cash in their pension pot to invest in a buy-to-let property, spawning a new generation of landlords.
Just 34% of respondents to the Mortgage Solutions poll did not predict a notable increase in older landlords joining the industry as a result of the changes.
According to research published by the Bank of Ireland, some 41% of pensioners are expected to take a lump sum out to buy a property or to pay off their mortgage on retirement.
Middleton Finance principal Danny Bailey said the poll results did not surprise him and that he had already received an uptake in interest among older borrowers for buy-to-let mortgages.
“It is difficult to quantify if we will see a significant wave in new landlords. We will however see more older borrowers taking on buy to let mortgages. Many I speak to are disillusioned with their pensions and are looking at other ways to supplement their retirement income.”
Bailey added that more potential landlords joining the market was likely to add to first-time buyer’s woes.
“I see it having an effect on first-time buyers, there is a limited amount of good property on the market at the moment and many people chasing the same properties,” he said.
Alex Hammond, head of marketing communications at Kensington, said the changes were expected to at least “prickle interest” among older buyers, which could lead to an increase in demand. However, he said brokers would need to provide customers with solid and meaningful advice.
“Buy-to-let should never be considered as a short-term cash cow and the onus will be on brokers to provide their clients with sound advice about the pros and cons of their choices. But, that said, an investment in property will always prove attractive to investors who value a physical underlying asset and the potential for both income and capital gain.
“It is certainly an opportunity for those involved in the market, but the uptake will ultimately depend on the most appropriate action for individuals who enquire about doing this.”
