With more people growing increasingly disillusioned with pensions, a high percentage of landlords, many of which have been adding to their portfolios of late, have indicated that they see their properties as their pensions, according to a survey conducted by BDRC Continental.
The research shows that 61% of landlords plan to live off the rental income, 20% will sell some of the properties in their portfolio, whilst 5% intend to sell all of the properties in their portfolio. Meanwhile 39% say their plans will depend on the state of the property market when they retire.
Mark Long, director at BDRC Continental, said: “Landlords consistently tell us that they see their property portfolio as forming a critical part of their pension provision for the future. On average, landlords intend to remain active in the rental sector for another 15 years or so, and see a combination of capital gains and rental income as underpinning their pension strategy.”
With tenant demand up 7% in Q3 and average yields increasing 0.5% to 6.7%, many private landlords view property to be a safer bet than investments such as pensions. Some 10% of private landlords used previously invested funds to purchase their property outright with 31% of them stating it was because they believe investing in property will produce a better return on their money. Other reasons include providing an income (19%), acting as a long term investment and off-setting poor pension performance (both at 15%). Whilst 8% said property was an alternative investment. 6% believe property carries less risk than more traditional forms of investment, for example stocks and shares.
Long added: “Despite the challenging economy, the private rental sector remains resilient for most of Britain’s private landlords. In Q3 this year we saw further evidence of that as the number of private landlords with a single property making a loss fell by three quarters from 16% in Q2 this year to 4% in Q3, and although short-term confidence has taken a bit of a seasonal knock, I fully expect optimism to recover as we end 2012 and enter 2013.”
Article courtesy of Property Investor Today