Tenth of landlords to rely on rental profits as main income source

One in 10 landlords reaching retirement age expect income from their properties to be their biggest source of income for their pension years, Savills research shows.

This rises to one in five for landlords who are self-employed.

Lucian Cook, head of residential research at Savills, said: “Buy to let investment has been an attractive way to supplement or build up retirement savings over the past 20 years, especially for the self-employed’

“Many are proclaiming that the golden age of buy-to-let investment is over because of increased regulatory requirements, a higher tax burden and the prospect of further increases in the cost of debt.

“But it is set to play an increasingly important role in providing pension income, with many landlords, who were at the forefront of the buy-to-let explosion of the noughties, now hitting or approaching retirement age.”

Landlord profits have been hit, as the cost of mortgages has spiralled this year.

Tax changes have also hit investors hard.

Between 2017 and 2020, the government gradually phased out tax relief on buy-to-let mortgages, replacing it with a 20% tax credit.

Cook added: “Older landlords, in particular, have accumulated significant housing wealth through their investments. That means that they are in a good position to weather the storm as economic conditions toughen, being well insulated against interest rate rises.

“As a result, they will be an important source of private rented accommodation for younger households, especially as more heavily leveraged Landlords find it more difficult to make the sums add up.”

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