A combination of factors – including the loss of most final salary pensions, a lack of confidence in some investment markets and diminishing returns from pension pots when taking a lump sum – have left many people aged between 30 and 50 concerned about their future retirement income.
As a result, many have turned to the buy-to-let market, which continues to offer far greater returns than the majority of other investment options.
While a 2016 study by Barclays found shares offer a 2.3 per cent return over 10 years after inflation is taken into account, government bonds provide three per cent, corporate bonds achieve 1.8 per cent and cash in a savings account actually loses 1.1 per cent of its value, investing in property has become increasingly more profitable.
In comparison, figures from Sequre Property Investment earlier this year showed a landlord who buys a property for £100,000 with a £30,000 deposit will achieve a return in excess of five per cent each year by 2023.
Allison Thompson, managing director at property specialist Leaders, says: “Incredibly high tenant demand and a lack of housing supply in many parts of the country has pushed rents up and provided buy-to-let investors with a wonderful opportunity to enjoy a significant return.
“Landlords can expect to achieve a yield of between four and five per cent, although in some cases this can be as high as eight per cent, underlining the extent to which the buy-to-let market outperforms almost all other investment types.
“In addition to substantial rental income, investors will benefit from capital growth over the medium to long term. Over the last five years, house prices in the UK have risen by almost 28 per cent, which shows just how committed investors also stand to gain through capital appreciation. While not guaranteed, an increase in value is highly likely based on past performance of the market.
“All of this makes property the perfect option for those looking ahead to their future retirement income. Landlords will benefit from a reliable and regular income stream that can be used initially to pay off a mortgage and then to fund their post-work life, while they always have the option of selling up and taking a lump sum to enjoy in later years.
“However, as with any investment there are risks associated with buying to let, which is why working with an experienced local letting agents is the only way to be confident of picking the right property in the right place at the right time and using it to ensure a safe and comfortable retirement.”
For more information or advice on buying to let in your area contact your local Leaders branch.