Pension freedoms driving buy-to-let: Moneyfacts

Pension freedoms driving buy-to-let: Moneyfacts

The buy-to-let market is continuing to flourish, with new data revealing that the number of buy-to-let deals available to first-time landlords has increased 13 per cent in the last few months.

According to Moneyfacts, there were 574 new buy-to-let deals available in April to 664 today; representing a 40 per cent increase on the 396 deals available two years ago.

Charlotte Nelson, finance expert at Moneyfacts, said that with the sector lying outside the Mortgage Market Review, it is “unsurprising” that the number of buy-to-let deals has risen to an “all-time high”.

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Ms Nelson said: “With 60,000 pensioners utilising the new pension freedoms, it’s highly likely that some of this money has been accessed with buy-to-let in mind. Savings rates are currently so poor that many are looking elsewhere to fund their retirement.

“Buy-to-let providers are seeking to capitalise on this new pool of cash and are now offering more deals than ever to first-time landlords.

Two weeks after the pension freedoms kicked in, data from specialist mortgage lender Kensington revealed that 53 per cent of retirement savers said they would consider investing or are already investing in buy-to-let to increase their income in retirement.

This followed suggestions that the new pension freedoms will spark a buy-to-let boom. FTAdviser reported in February that advisers and estate agents had acknowledged this could be the case, however many claim the scale of the likely investment is being overblown as not many people have a large enough pension pot.

Ms Nelson pointed out that with high rents and mortgage rates at record lows, there is potential for big returns, but this may not be the case forever as the base rate is likely to rise at some point in the future.

“Buy-to-let is not without its risks and anyone seeking to enter this sector would be wise to seek the advice of a financial adviser to see if this is the best route for them.”

According to Bank of England data, there was increase in value terms for buy-to-let lending over the last year, from £6.8bn in the first quarter of 2014 to £7.6bn in the first quarter of 2015.