Proportion of landords aged 55-59 up from 7 to 18.5% in past three months
12-24-2015
The 55 to 70 bracket makes up a third of buy-to-let mortgage applications
By Marc Shoffman for Thisismoney.co.uk
The proportion of newly-retired landlords entering the buy-to-let market has more than doubled since pension freedoms were introduced in April, a commercial mortgage broker has claimed.
Figures from Commercial Trust show the proportion of applications from individuals aged 55 to 59 in the third quarter of 2015 increased to 18.5 per cent, up from 7 per cent in the first three months of the year.
Meanwhile, those aged 55 to 70 now make up 31 per cent of applications.
New 'lease' of life: Over-55s are pouring into the buy-to-let market armed with pension cash
This has led many to predict a surge of pensioners looking to buy-to-let, with the data from Commercial Trust giving an indication of the wider market.
It comes after pension freedoms were introduced in April, allowing retirees over the age of 55 more flexible access to their retirement savings.
Rather than be forced to purchase an annuity or go into income drawdown, you can now access your funds subject to your own tax rate and spend your money as you please.
However, while the 50 to 59 age group represents the biggest increase in proportion of customers, the share of applications from those in older age brackets has actually declined - as the table below shows.
PROPORTION OF BUY-TO-LET APPLICATIONS BY AGE
|
Q1 |
Q2 |
Q3 |
| <30 |
1.50% |
4.60% |
2.30% |
| 30-34 |
11.00% |
7.80% |
9.10% |
| 35-39 |
13.40% |
12.00% |
11.40% |
| 40-44 |
18.30% |
16.60% |
17.90% |
| 45-49 |
13.10% |
15.20% |
15.90% |
| 50-54 |
14.00% |
14.20% |
12.50% |
| 55-59 |
7.00% |
13.00% |
18.50% |
| 60-64 |
9.50% |
8.80% |
4.80% |
| 65-70 |
9.10% |
5.10% |
5.70% |
| >70 |
3.00% |
2.70% |
2.00% |
Overall, almost a third, 31 per cent, of Commercial Trust customers are now in the 55 to 70 bracket, up from 28.6 per cent in the first three months of the year.
The proportion of approvals are more weighted towards those age 50 to 61.Those between age 55 and 61 make up 15.6 per cent of buy-to-let approvals.
Over-50s in total make up 30 per cent of completions among Commercial Trust clients.
PROPORTION OF BUY-TO-LET COMPLETIONS BY AGE
|
Q1 |
Q2 |
Q3 |
| <30 |
5.50% |
2.10% |
4.30% |
| 30-36 |
7.50% |
7.00% |
6.60% |
| 35-41 |
9.60% |
13.90% |
8.50% |
| 40-46 |
21.90% |
18.70% |
19.00% |
| 45-51 |
21.20% |
19.80% |
15.20% |
| 50-56 |
11.60% |
13.90% |
16.10% |
| 55-61 |
9.60% |
7.50% |
15.60% |
| 60-66 |
4.10% |
8.00% |
9.00% |
| 65-72 |
7.50% |
6.40% |
2.80% |
| >72 |
1.40% |
2.70% |
2.80% |
Andrew Turner, director of Commercial Trust, predicts the numbers could grow when retirees are allowed to sell their annuities from April 2017.
However, pensioners will still need to prepare for incoming clampdowns on the buy-to-let sector such as the introduction of an extra 3 per cent stamp duty charge from next April and the phasing out of mortgage interest relief from 2017.
Turner said: ‘We have seen a definite and significant hike in buy-to-let mortgage applications from the over-55s since the introduction of pension freedoms. This bears out the predictions that more pensioners would to use their pension freedoms to invest in buy-to-let.
‘The worry is that no sooner has it been made possible for the over-55s to put their money in bricks and mortar than new tax rules are brought in that appear to want to penalise the smaller investor and drive them out of the market. If this market contains a high proportion of pensioners, this could well turn out to be a tax on pensions through the back door.’
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