Date Published 22 November 2012
Findings from the latest BM Solutions/ BDRC Continental survey show that a greater proportion of landlords are turning to the private rental sector to prepare their finances for retirement.
Of those single property and portfolio landlords surveyed, 80% view their property as a supplementary income to their pension, with 6 out of 10 of these landlords actively planning to live off the rental income.
A further four in 10 intend to make a decision dependent on the state of the property market once they reach retirement. Very few portfolio landlords plan to sell all properties in their portfolio when they reach retirement. Of the 38% of landlords who have previously looked at alternative retirement planning, such as fund investment, a third said they selected the BTL market because they believe investing in property will produce a better return on their money. Other reasons include providing an income, acting as a long term investment and offsetting against a poor pension performance.
Rental yields have increased to 6.7% this quarter, returning to a similar level seen in Q3 2011. In comparison, the average rental yield was 6.2% in Q2 2012, 6.2% in Q1 2012 and 5.9% in Q4 2011.
The proportion of landlords adding property to their portfolio in the last quarter has increased by 3 percent to 15%. However, landlords are becoming much more selective on what properties to add to their portfolio with the average number of properties being added decreasing significantly, back to the level seen in Q1 2012, from an average of 2.6 to 1.8.
Looking forward to the next 12 months, just over 1 in 5 landlords plan to purchase an additional property.
Phil Rickards, head of sales at BM Solutions said: `It is clearly evident that Britain`s love affair with bricks and mortar remains strong with many landlords looking at property investment as a supplement to their pension in retirement.
`While landlords remain confident in the long term viability of the rental market; with the economic uncertainty in the UK and Europe, landlords are being more cautious and selective in expanding their portfolios.`