25 Sep

'Grey savers' influencing buy-to-let market

'Grey savers' influencing buy-to-let market

There has been an increase in the number of so-called grey savers who are becoming buy-to-let landlords.

Research shows that one in 12 over-60s owns a second home, with many being purchased as an investment property.

Over the past two years, there has been a 58 per cent increase in the number obtaining loans to purchase buy-to-let properties and the over-60s now own around 25 per cent of the UK's property wealth.

Figures from the Council of Mortgage Lenders (CML) show that older savers are looking to alternative investment options for strong returns following the record low interest rates.

However, increased rental demand and favourable buy-to-let loans means many have invested in property to help support them in their retirement or build up a nest egg for relatives.

A study from insurer LV= concluded that one in 12 Brits aged over 60 owns a second home and that their property assets equal around £93 billion - a quarter of the country's £4.01 trillion property value.

Ray Boulger of mortgage experts John Charcol told the Daily Mail: "Buy-to-let is a very attractive proposition for many savers when they sit down and do the sums.

"And interest is only going to rise, particularly when new pension rules allow more retirees to access the cash in their retirement pots. It's likely then that we'll see even more investors start to look at buy- to-let."

Many have been attracted following a decline in the cost of taking out a buy-to-let mortgage as the market has become more competitive. In June 2013, the rate for the average buy-to-let loan was 4.23 per cent but last month it was down to 3.76 per cent.  

According to LSL Property Services, the average monthly rents in England and Wales have increased by two per cent since July 2013 and now stand at £753 a month. Therefore, becoming a landlord could offer stronger returns than the average saving account or pension fund.

A number of lenders have also removed rules that previously supported upper age limits for borrowers and buy-to-let loans often do not have as stringent affordability guidelines as standard mortgages.

This means many can have a buy-to-let loan until they are 85 and there are currently 1.57 million homes in the UK with a buy-to-let mortgage.ADNFCR-1222-ID-801750266-ADNFCR

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