Rising costs coupled with increased exposure to rent arrears may spark a change in trend and force landlords reaching retirement age to leave the buy-to-let sector rather than continuing to rent out their properties.
Recent research has revealed that a great proportion of landlords are remaining in the buy-to- let sector well into their retirement as they judge their rental income to be a great way to finance their retirement.
In recent years this has been a good option due to record demand for rented properties and rental yields also promising good returns.
But Graham Kinnear, managing director at Landlord Assist is concerned that this trend won’t last due to rising costs incurred by landlords and the risk of being exposed to rising rent arrears when the Universal Credit scheme is rolled out nationwide later this year.
He says: “Many landlords rely on their buy-to-let properties as a way to safeguard their income in retirement. In recent times this has been a safe bet as increased demand for rented properties has forced prices to reach record levels. However, with landlords being faced with increased legal obligations and costs, we are worried that the trend for landlords to continue renting out their properties well into their retirement will change in the coming years and they may consider leaving the sector at a time when the UK is already experiencing a housing shortage.
“Landlords already face having to pay council tax on empty properties and costs for referencing checks, letting agents’ fees and selective licensing agreements in some areas. Combine this with the possibility of being exposed to increased tenant arrears under the forthcoming Universal Credit scheme - which will see tenants responsible for passing on the rent rather than landlords receiving direct payments - it is a concern that many landlords reaching retirement age may opt to leave the sector rather than remaining active.”
Stephen Parry, commercial director at Landlord Assist says: “A large proportion of UK housing stock is held by private landlords approaching retirement who see their property portfolio as a way to boost their pension. They are therefore keen to receive a steady stream of income and reduce their exposure to debt.
“We are worried that if faced with rental arrears under the forthcoming Universal Credit scheme many landlords may reconsider their strategy and consider leaving the sector altogether.”
Landlord Assist provides tenant referencing and tenant eviction services on a nationwide basis and can be contacted on 08707 662288 or via their website www.landlordassist.co.uk.