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Buy-to-let investors shrug off tax crackdown

The popularity of buy-to-let looks set to defy Chancellor George Osborne's tax crackdown with nearly three out of 10 over-55s planning to invest in the next two years.

Of these, 70% said they would be investing in the sector for the first time, according to new research from Prudential.

Ironically, the trend is being driven by Osborne's pension freedom reforms, with just over half planning to raid their pension pots to buy property.


The insurer has also identified a new trend, which it has named “buy-to-let-to-retire”.

One in five over 55s say they are considering buying their ideal retirement home now and letting it out until they retire.

Prudential said this is challenging the traditional route of simply selling up and downsizing on retirement. 

Of those who have already made a buy-to-let investment, nearly one in three said they did so to secure a property to live in one day.

The research also found that 17% of older people ‘buy-to-let-to-bequeath’, investing in bricks and mortar to hand down a property to a loved one in future.

Stan Russell, retirement expert at Prudential, said the appeal of buy-to-let-to retire is understandable in a post-pension freedoms world.

But he warned that taking money from your pension savings can be risky, even if you plan to re-invest it.

“Before making decisions that could reduce retirement income in the future, not to mention increase this year’s tax bill, it is important to make the most of the advice and guidance available.”

  • Commercial Trust

    One big consideration here is the fact that most buy-to-let lenders ask whether or not the client intends to live in the property in the future. If the answer is "yes", there is a chance that the lender will class the transaction as regulated, even if the client intends to redeem their mortgage before that point.

    This could limit the options available to 'BTLTR' borrowers. Many lenders stopped offering regulated BTL mortgages when the MMR hit. Landlords hoping to live in their rental properties following retirement might struggle to find finance as a result.


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