Fewer people in the UK considering using property for an income in retirement

Fewer people in the UK are willing to become a buy to let landlords or to downsize in order to boost their retirement income, new research has found.

The findings come despite the majority approaching retirement recognising that property represents a significant store of wealth, according to a report Home is Where the Wealth Is from retirement income specialists Retirement Advantage.

The research asked people how likely they are to consider buying a new property in order to rent it out, to provide them with retirement income with 35% willing to consider it and 62% unlikely to do so. The report says that this is a pronounced departure from the almost even 49% to 51% split recorded this time last year.

The shift is even more pronounced for over 55s, with just 10% saying they would consider an income from buy to let and 87% saying they wouldn’t compared with 27% and 73% respectively last year.

According to Retirement Advantage, while the fall in appetite over the last year is striking, there remains a substantial number of existing landlords with as many as 900,000 estimated to be over 55.

Furthermore, just 20% of people say they are likely to sell their property and move to a smaller one when they retire, down from 26% last year. Among over 55s it has fallen from 22% to only 16%.

The reduced appetite for entering buy to let is potentially a reaction to new stamp duty surcharges on investment properties and the gradual removal of mortgage tax relief, according to Alice Watson, head of product and marketing at Retirement Advantage.

But she believes that property is an option to be considered. ‘There are still nearly a million landlords over 55 and for those landlords there are innovative new mortgage options available to increase ways to boost income from investment properties,’ she said.

But she added that downsizing is becoming less popular, not least because the fees associated with selling up and moving can be much higher than expected. ‘Property can still play a significant role in providing retirement income, though. Indeed, there is a pressing need for it to do so, as pensions and other savings are increasingly unlikely to meet many people’s retirement expectations on their own,’ she pointed out.

‘There is a real opportunity for advisers to help clients understand other ways property wealth can be accessed, routes which mean clients can stay in their home and still pass them on to next of kin,’ she added.