29^th Jul 2018

A pension 'Black Hole' could now have to be faced by up to one million landlords due to the raft of tax changes, new legislation and rules that have and will come into effect. It could now mean that the profits generated from BTL properties will not be enough to cover their retirement in the manner that they had originally planned for.

Nearly half of all landlords - 43%- invested in a BTL property to look after them in their retirement with many being told that it is a 'failsafe'.

Nearly 75% of those landlords who have invested in a BTL 'pension pot' have stated that they will sell up if their margins fall much lower or if they start going into the 'red' because of increasing costs.

Alexandra Morris, managing director of an online letting agent portal, said: “Smaller, casual landlords have been impacted by rising costs of managing their properties, with 38 percent citing the high cost of repairs as one of their biggest concerns.

“The problem impacts landlords with a buy-to-let mortgage the most severely, as these additional overheads, combined with recent changes to the private rental sector, mean smaller landlords hoping for a steady income in retirement are now worrying that their properties won’t even cover their own costs.”

With a sizeable increase in numbers of homes appearing on the market it will undoubtedly become harder to sell or to achieve the price required and will affect their pension income or worse still... be unable to cash in their investment.

Those landlords most likely to be adversely affected, are those approaching their retirement age as they will have less time to turn things around in their favour.

However the over 35's age group has a 47% of investors deciding on a property as their pension investment, there are only 24% of younger investors choosing to do this.

A self employed part time landlord with two properties, Eileen Cooper, has seen her plans scuppered by the new changes, Cooper said: “We planned to buy another property once the mortgages on our current rental properties are paid off, however we have now decided against this due to the new laws and regulations brought in by the government, along with the ongoing changes to the tax system, which make it much less viable as a long-term investment.

“Due to changes in laws and regulation, the time required to manage the properties isn’t worth it."

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