Investors aged 65 and over generate a net income of over £10bn from letting homes, according to estate agent Savills.
More than half of landlords in England are using or intending to use buy-to-let properties as retirement income to supplement their pension.
After deducting outstanding mortgages, buy-to-let properties add £378bn to the net wealth of retirees.
Property as a pension powers up
The use of property as a pension is only expected to grow. One in 10 approaching retirement expect that property will be their biggest source of retirement income. This increases to one in five among the self-employed.
And a further £346 billion worth to buy-to-let stock is held by households that are due to reach traditional retirement age in the next 10 years. As such, residential investment income is set to become an increasingly important contributor to pensioners income in the coming years.
Lucian Cook, head of residential research at Savills, said: “Buy-to-let investment has been an attractive way to supplement or build up retirement savings over the past 20 years, especially for the self-employed.
“Many are proclaiming that the golden age of buy-to-let investment is over because of increased regulatory requirements, a higher tax burden and the prospect of further increases in the cost of debt. But it is set to play an increasingly important role in providing pension income, with many landlords, who were at the forefront of the buy-to-let explosion of the noughties, now hitting or approaching retirement age.
“Older landlords, in particular, have accumulated significant housing wealth through their investments. That means that they are in a good position to weather the storm as economic conditions toughen, being well insulated against interest rate rises.
“As a result, they will be an important source of private rented accommodation for younger households, especially as more heavily leveraged landlords find it more difficult to make the sums add up.”
