13th
Aug 2017
The fate of landlords who are relying on their rental properties to 'provide for them' throughout their retirement years, could cause a future pension disaster.
According to the Mintel consumer market report, 77% of UK landlords, approaching two million people, bought buy-to-let properties to fund their retirement. The report also states that 68% of UK landlord respondents' to the survey are convinced that their BTL investment provides them with a strong investment plan.
The ONS (Office for National Statistics) has found that projected outgoings for future retirees will fall short if solely reliant on a full state pension; hence many people have chosen different options to fill the gap and have opted for the BTL route.
A spokesperson for the trade body believes that the government's tax changes for the sector will badly affect the landlords relying on their properties to provide them with a suitable pension, he said: "As a consequence of government policy over recent decades almost two million people are reliant on their property to fund their later years, but the changing tax regime will substantially reduce the income they receive from these investments and so compromise the retirement plans of a significant number of hard-working people. Around a quarter of UK landlords are already retired, and 37% are aged 55 or over, so there is a pressing need to tackle these issues without delay."
The body is urging the government to reconsider the amount of CGT (Capital Gains Tax) by reducing it to help those landlords when they decide to sell up, and to introduce a new financial tax model that has different tax breaks based on how long the property has been owned and rented out.
The spokesman added: "Landlords who have invested in residential property for the long term are different from short-term speculators who buy and develop properties, and this should be recognised when it comes to how much capital gains tax they pay when they decide to sell. It is not always in the best interests for landlords to continue to manage residential property into later life. A capital gains relief like we propose would provide an incentive to sell, allowing people to sell poorly performing properties and potentially purchase an annuity or invest in more liquid, lower risk assets to fund their retirement instead."
News Archive »