Make no mistake, the number of older people approaching or already in retirement, who are investing in buy to let, is growing, with London and the South East proving popular locations.
Latest analysis from leading buy to let broker firm Commercial Trust Limited, indicates that for the full calendar years 2015 to 2017, 38% of all completed buy to let purchases from those aged 50 and over, were in the capital and neighbouring South East.
Averaged over the three years, the South East (19.14%) was marginally ahead of London (18.95%) for overall market share for this age demographic. This may be attributed to greater consistency in the South East, which was sustained during 2017, when London saw a sharp fall in purchase activity.
East Anglia proved the third most popular area for investment (12.20%) over the three-year period, closely followed by the South West (11.07%).
The data suggests that London and the South East retain plenty of allure for prospective private rental sector investors, who have the available capital to complete a purchase in these regions.
A report from Retirement Advantage in 2017, suggested that one in ten people aged 50 or over, is likely to invest in property post-retirement.
Meanwhile, in April 2018, Savill’s released a report showing that roughly three quarters of the UK’s housing wealth – amounting to £2.8 trillion of housing equity, was owned by people over the age of 50.
With the unpredictability of annuity rates, greater freedom with how to spend their pensions and many lenders willing to accept pension income as a source of affordability, many over 50s perceive property to be a suitable alternative way to fund their retirement.
Investment in buy to let property can offer the prospect of capital growth, while a regular rental income may help to boost retirement income.
How a broker can help
Anyone considering using their pension lump sum to invest in a buy to let venture should, in the first instance, seek professional financial advice.
If you are in the run up to pensionable age, or older and opt to invest in rental property, there are a few key factors to consider . Age limits, income levels, term length and pension type can impact your borrowing potential.
Upper age limit
One of the key considerations for a lender is the upper age limit for an applicant.
At the present time, a representative look across the marketplace finds approximately a third of lenders set the maximum age at which you can apply at between 64 and 69 years old, a generous two-thirds set their maximum at between 70 and 80 years of age.
Maximum age at term end
Maximum age at the end of the term of the mortgage also varies from lender to lender.
The bulk of lenders require a buy to let mortgage loan to be repaid by a maximum age of 80 or 85 years-old. Exceptions to this are hard to find, however, it is possible in one instance to borrow up to age 105 and with another lender, to the grand age of 110 years-old, while one lender sets no maximum.
Personal income
Another consideration is the lender’s approach to income. Whilst some lenders will set no minimum income requirement, others may set a threshold, often £25,000 per year, before even contemplating rental income.
Pension type
If you have a State Pension (rather than a private one), it may be harder to secure the funding you require.
Existing landlords with rental income
Conversely, if you are an existing landlord and are over retirement age when applying to fund further buy to let investment, with an SA302 form to prove your existing rental income, you may not be classed as retired in the eyes of the lender.
Working with a specialist
Whilst there are qualifying criteria that may affect you, a specialist can efficiently zone-in on the available options, having built a picture of your circumstances and requirements.
Certainly with 11.4 million people over the age of 65, a figure forecast to increase 12% by 2020 and nearly double to 19 million by 2050, more and more people may consider buy to let to fund their lifestyle beyond age 65.
Making your life’s earnings work hard for you is a critical step. A well placed application, carefully selected by a specialist, to meet your criteria objectives and achieve a great financial deal, can smooth the path to a relaxing and fruitful retirement.
