Recent changes to the rules surrounding pensions have made it a lot easier for pensioners to access their pot of money. Previously, most people used their pension money to buy an annuity once they reached retirement age. Now pensioners are free to do whatever they like with their money: buy a Porsche, go on a round-the-world cruise, or invest in a buy to let property.
Affordability Issues
However, just because pensioners are now free to invest in rental property, it doesn’t mean they can afford to. One of the UK’s leading provider’s of buy to let mortgages is claiming that the majority of pensioners won’t have enough spare cash to put down an average deposit of £43k.
Kensington Survey
Kensington Mortgages carried out a survey on 915 savers, which showed that 54% of respondents aged 40 and over would consider investing in buy to let, but with lenders requiring a minimum deposit of 25 per cent, many won’t want to tie up their cash. Despite this, 28% don’t know how to apply for a mortgage.
According to a spokesman from Kensington: “Raising a 25% deposit for a buy to let mortgage from pension funds will be tough as a look at average property prices across the country shows. Would-be landlords will need to be realistic and it is worrying that so many are considering buy to let without knowing how to apply for a mortgage.”
Many would-be landlords surveyed by Kensington were concerned about whether a buy to let investment property would generate enough income.
