The ‘rent-fuelled retirement’ revolution – thousands look set to cash in pension savings and become landlords

• 25% of future retirees plan to use a lump sum from their pension savings to pay for a buy-to-let property
• More people likely to put pension savings into a rental property than paying off existing mortgages or buying a new home for themselves or their family members
• Greater London and South England seen as best places for buy-to-let investment
• Bank of Ireland UK’s latest buy-to-let market index shows confidence sits at 62.3 – the highest recorded and a positive outlook for the UK’s buy-to-let market over the next 12 months

Bank of Ireland UK’s fourth buy-to-let market index has found that thousands of people are poised to make the most of new pensions freedoms and use their pension pot in order to enter the buy-to-let market. A quarter of all those polled agreed that they planned to use a lump sum when they retire to buy a property for rental, a trend which will see the rise of the ‘real estate retiree’ generation.

So strong is the allure of the B2L market, of those who said they were to take out a lump sum from their pension savings on their retirement, most believed buying a property to let out was their top priority – well above plans such as helping buy a property for other family members (16%), paying off an existing mortgage (15%) or buying a new home for themselves (14%). 10% of those surveyed said they would use any cash drawn from their pension savings for other reasons.

Bank of Ireland UK’s latest buy-to-let market index shows that confidence in the B2L market is at its highest level since the tracking project began a year ago, and is sharply up on its level last quarter. Any score in excess of 50 indicates a positive outlook for the UK’s buy-to-let market over the next 12 months – this latest report shows confidence sits at 62.3 – up from 59.6 in December, and 58.7 in June last year.

The quarterly research of attitudes among British property owners is conducted by Bank of Ireland UK in order to monitor trends within the buy-to-let market. The organisation uses the findings in order to provide tailored mortgage products through its partner the Post Office.

The positivity which is revealed appears not to be contained to those planning their retirement – 48% of homeowners surveyed said they were interested in becoming a landlord within the next two years, with around one in six (16%) saying they were very interested in the prospect. However further education around the implications is needed, with only two fifths (42%) of existing B2L landlords believing they fully understand the impact of capital gains tax, and only 36% having a full understanding of inheritance tax implications.

Mark Howell, Director of Marketing & Customer Management, Bank of Ireland said: “With the latest findings allowing us year on year comparison – it is clear that there is building optimism around the buy-to-let market.”

“The fact that many are hoping to become landlords must be considered in light of the continued confusion surrounding the tax implications of the market, especially in regards to inheritance tax and those who find themselves becoming landlords through bereavement. Better education around these issues is a must, especially with so many set to join the ranks of landlords across the UK.”

ENDS

Note to Editors:

1. Survey of 400 British property owners between 9-23^rd March 2015

• 200 private landlords (small landlords only, those with under 10 properties in their portfolio)

• 200 homeowners  (who either own their own home outright or are buying it on a mortgage)

     2. The B2L Market Index is formed by aggregating and four index scores, each of which is measured on a        scale of 0 to 100:

Note to Editors:

1. Survey of 400 British property owners between 9-23^rd March 2015

• 200 private landlords (small landlords only, those with under 10 properties in their portfolio)
• 200 homeowners  (who either own their own home outright or are buying it on a mortgage)

1. The B2L Market Index is formed by aggregating and four index scores, each of which is measured on a scale of 0 to 100:

1. MAI Mortgage Affordability Index (how affordable overall are your current mortgage payments, for all your UK properties taken together- from 0 = not at all easily affordable to 100 = very easily affordable).
2. PPI Property Prices Index (belief that property prices in this region will rise faster than inflation in next 12 months-  from 0 = not at all likely to 100 = very likely)
3. RVI Rental Values Index (belief that rents for private property in this region will rise faster than  inflation in next 12 months- from 0 = not at all likely to 100 = very likely)
4. NPI New Purchase Index (likelihood of buying another UK property on a mortgage or outright over next 12 months, to rent it out - from 0 = not at all likely to 100 = very likely)