What effect are pensions having on the buy-to-let market?

Maybe I should have added that they also come in many age ranges, with investment property serving many differing purposes for different types of people. And, as also pointed out in this piece, pension provision remains key motivation for involvement within the BTL sector involvement.

Given the demographical needs of the UK population, it’s hardly surprising that later life financials continue to come under the spotlight in terms of borrowing, how pension pots are being utilised and what role existing properties - whether residential or investment - play in their future. So, as we sit on the cusp of Pension Awareness Week, it seems like a prudent time to take a brief look at how people are viewing pensions and the effect this could have on the BTL market.

A Retirement Confidence Survey, conducted by Aegon, revealed that people in the UK are feeling slightly more confident about their ability to retire comfortably than they did two years ago. Its latest figures showed that just over half now feel confident about their ability to retire comfortably, compared to just under a half in 2017. However, while retirement confidence appears to be improving, many remain in the dark when it comes to their pension savings and arrangements for funding their retirement. One in ten (10%) of those polled admitted that they don’t have any pension savings. 36% had never estimated their income needs for retirement, therefore putting themselves at significant risk of being unable to maintain their existing lifestyle. A quarter (25%) of those with pension savings said that they didn’t know how much they hold in pensions. This was highest among those aged 35 – 54 (30%). Whilst only 19% of 55-64 year olds didn’t know how much they hold in their pensions at the moment, this still represents a significant number when considering how close they are to retirement.

It’s obviously great to see retirement confidence growing, although I can’t help but wonder how large a role property plays in this equation. After all, property has long been regarded as one of, if not, the safest ways to save for retirement. A major reason for this is the relative simplicity and transparency of this investment process. However, as we all know, being a landlord has become increasingly complex when considering recent tax and regulatory changes.

I don’t have the relevant statistics at hand to suggest just how many BTL owners are still reliant on these investments being integral components within their overall retirement plans, but I can hazard a guess that it is a significant proportion. The question is – how might these plans change?

It’s inevitable that some pension pot landlords will look to cash in early as costs rise and priorities may change. On the flip side, with increased lending competition resulting in some historically low rates (which are likely to have never been seen by many of these landlord types), the BTL remortgage market is seeing some healthy levels of activity.

The value of specialist advice also continues to rise in line with this additional market complexity and wider product choice. Therefore, it remains vital for those thinking about their retirement options to consider all the influencing factors and seek the best advice possible to secure their property-related retirement objectives.