Pensioners rejecting annuities in favour of BTL

The research from Direct Line for Business found that the main reasons for considering this investment included producing a regular income (43%), the perceived security of the investments (23%), and expected capital appreciation (17%).

One in ten (9%) potential buy-to-let investors favour the investment because they would like to invest in something that will allow them to leave an inheritance to their children.

The research also highlighted the perceived high returns available for landlords as those approaching retirement anticipate an average (median) yield of between 10% and 14% on their investment.

Property Lettings Expert, Kate Faulkner said:

“Buy-to-let is becoming an attractive option for people, especially while property and rents rise. It can deliver some great returns over 15-20 years. Given the recent pension liberation announcement, for some it could be good to diversify their investments when approaching retirement, but landlords need to seek financial/expert advice and ensure they understand the returns that property can deliver and especially the tax implications.”

Jazz Gakhal, Head of Direct Line for Business explained:

“Buy-to-let can be a flexible investment, providing an immediate source of income as well as being a long term asset. As such, it is understandable that people approaching retirement age are considering investing their pension pots in property. However, prospective landlords should understand that buy-to-let does not come without financial risk.

“Legal expenses for repossessions and potential damage to property are but just a few of the costs that can take significant chunks out of landlords’ annual yield. Taking the necessary precautions such as carrying out full reference checks on prospective tenants, inspecting your rental property regularly, and taking out landlord insurance can help to minimise some of the risks faced by landlords.”