by Mark Johnston
Retirees Become Landlords.
In the wake of the financial crisis pensions and savings have taken a heavy blow and therefore many retirees are no longer finding these sources of income adequate to sustain a reasonable retirement income.
According to the National Association of Pension Funds, 48 per cent of all current workers are now planning to work beyond the state pension age as they simply can not afford to retire.
Recent figures from the government funded Money Advice Service (MAS) also showed that more than four in ten people are resigned to working as long as they can as they have not yet saved enough to retire on.
Danny Silver, managing partner of the village group, an ‘active living’ resort for the over 50’s in France, said “long gone are the days of final salary pensions and relying on a decent state pension once you hit retirement. Older people who have worked hard all their lives and want to retain a decent standard of living must find the extra funds themselves”.
Therefore a new report from Saga, a leading company that offers an array of products and services for the over 50’s, shows that pensioners are becoming landlords boost their retirement income.
The boss of a residential lettings firm says a new generation of older landlords is “almost stumbling” into private buy-to-let housing.
Some of these older people who had planned to sell up and retire somewhere else, but found their home was worth less than they expected, are now renting out their property and using the released equity as a deposit to buy or rent another one.
Belvoir, a national letting agency, has reported that in the last few years it has seen a surge in older people becoming landlords.
Research has also revealed that the number of older landlords has increased by around 33 per cent since 2009, this therefore shows a significant trend in emerging retiree landlords or ‘grandlords’ as they have now been dubbed.
Jason Stockwood, of Simply Business, the UKs leading independent online insurance broker, believes “with the current squeeze on pensions, this is proving a good source of income for people of retirement age”.
However, there are of course risks involved in the buy to let sector such as, although the private rental market is expected to grow considerably over the next five years, there are no guarantees this will happen and if demand for rental property drops so will a landlords income.
Also it is worth considering that if the Bank of England base interest rate increases from the record low of 0.5 per cent, landlords could face an increase in mortgage costs. Therefore they would need to ensure that they set rent levels at a point will mean that they are able to meet all of their debt obligations.
So in conclusion it seems that currently many retirees are putting their faith in property over pensions and intend to live off rental income in their later years.
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