Pension regulation changes cause a third of retirement savers to consider investing in buy-to-let property, analysis by Direct Line for Business (DL4B) reveals.
The small business insurer's research - conducted by Consumer Intelligence among a representative sample of 829 adults with a pension aged between 45 and 64 - found 32% of respondents said they would consider using some or all of their pension pot to fund the purchase of a buy-to-let property as an alternative to a traditional pension income funded by an annuity.
DL4B said its research showed the number of ‘silver landlords' could increase significantly following pensions freedom day in April next year.
Its research found among those respondents considering buy-to-let income, investment security and capital appreciation were the most frequent reasons for investing.
Those approaching retirement anticipated an average yield of 13% on their buy-to-let investment
Direct Line for Business head Jazz Gakhal explained: "Buy-to-let can be a flexible investment, providing an immediate source of income as well as being a long term asset. As such, it is understandable that people approaching retirement age are considering investing their pension pots in property."
However Gakhal said prospective landlords needed to understand that buy-to-let was not risk free.
She said: "Legal expenses for repossessions and potential damage to property are but just a few of the costs that can take significant chunks out of landlords' annual yield. Taking the necessary precautions such as carrying out full reference checks on prospective tenants, inspecting your rental property regularly, and taking out landlord insurance can help to minimise some of the risks faced by landlords."
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