The Daily Mail is advising its readers this morning on “how to build
a buy to let empire” as a way of propping up their dwindling pension
pots. The Mail cites falling house prices and the availability of buy
to let mortgages as two of the main reasons for the buy to let boom.
So just who are these new landlords and why are they taking the
decision to capitalise on rental properties?
Existing Property Owners
Not everyone wants to sell a property when a house move is on the
cards. Some families are forced to move for employment reasons, but
rather than selling the family home, they are letting it out instead.
For many, this approach makes perfect sense. Your mortgage is covered
by rental income and you have a nice nest egg waiting in the wings
should you decide to sell at a later date.
Investment Opportunists
In some areas, rental properties are in big demand and there are
multiple tenants fighting over a handful of homes. If a house or flat
happens to come on to the market at a decent price, there are plenty
of would-be landlords eager to snap it up and capitalise on the
rental income it is capable of generating.
Pension Income
The traditional way of saving for retirement has always been to pay
into a pension plan. Sadly this isn’t working for a lot of people
these days since interest rates are at an all time low. Rental
income, on the other hand, offers a far better return on investment—
one leading expert has estimated rental profit to be around 5.3% of a
property’s value, which is a lot higher than most measly savings
accounts.
