More are Turning to Buy-to-Let as it Increases in Popularity

With consumer confidence at an all time high, the buy-to-let market in the UK is looking exceptionally healthy. Around 17,700 buy-to-let loans were handed out in November 2014, totalling £2.4bn, according to figures released by the Council of Mortgage Lenders (CML). Recent surveys have also claimed nearly half of UK homeowners have their sights on becoming landlords within the next two years.

The strength of the buy-to-let market can be attributed to the current economic revival and changes to the annuity regulations as well as new “pension freedoms” which come into effect in April 2015.

It is widely believed such factors are now likely to attract increased investment from those approaching retirement with a flurry of retirees in the UK set to enter the buy-to-let market, planning to use a lump sum from their pension to buy a rental property.

The growing optimism among property investors is further reinforced by the availability of low interest mortgage deals currently available. The industry is currently locked in a price war and with cheap mortgage deals set to continue for the foreseeable future, many are capitalising on this opportunity to step into the buy-to-let arena.

With interest rates at an all time low, the potential returns from investing money in property can understandably be considered a more attractive option than the interest offered on many savings accounts. With such low interest rates continuing to energise the sector, the buy-to-let market is riding high at the moment, with the value of loans to borrowers increasing by 32% in 2014, compared to the previous year*.

However, it is worth noting that, those looking to expand into this field to fund a comfortable retirement, should be aware of the implications which come with such a venture. Factors such as income tax, capital gains tax and inheritance tax could result in a rental property not providing that sought after income for your retirement and could impact on the prosperity of beneficiaries, when the estate is valued in the event of death.

Investing in a buy-to-let property may undoubtedly have the prospect of securing valuable returns which could help feather the retirement nest, but plunging in “head first” without seeking adequate professional advice could result in you being caught out by the taxation legislation.

You will also want to ensure you have the best mortgage deal in order to get the highest possible return from your rental property, which is where impartial mortgage advice can make all the difference. This way, you can successfully purchase your property, with a realistic picture of your likely returns, knowing you have covered all angles and are fully prepared towards your journey in becoming a successful landlord.

* Source: The Council of Mortgage Lenders

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