Why more retirees are taking the plunge as buy-to-let property landlords

27 September 2024

Standfirst: With more than a quarter of all UK property rental income coming from landlords aged 65 and over, is setting up in the buy-to-let property business, a market worth £24.4bn in the UK, the way to go for those planning their retirement? During Business Finance Week, Redwood Bank CEO and co-founder Gary Wilkinson and Phil Gray, managing director of Watts Commercial Finance, have been adding their thoughts to the topic…

Encore entrepreneurs are those individuals who launch a new business in their retirement, and it seems becoming a buy-to-let landlord is increasingly popular.

The number of buy-to-let landlords in the UK aged 65 and over has increased significantly, with 696,000 landlords now in this age group – up 20 per cent from 582,000 in 2018, according to Landlord Today, which also reports that those aged 65+ now earn 27 per cent of all UK rental income, equivalent to £11.5bn last year.

Investing in property and becoming a buy-to-let landlord has been a popular choice for those in or planning for retirement and wanting to generate steady income alongside pensions and other investments. The tangible nature of property also makes it popular as a way to leave a legacy to future generations.

However, buy-to-let landlords have faced challenges in recent years. Changes in taxation and higher interest rates have squeezed margins. The sector has, however, been resilient and with the Bank of England base rate falling in August, a sense of optimism is emerging as lenders start to offer more favourable mortgage rates.

Those setting up a buy-to-let business should not expect an easy ride. While rental income can be described as passive, the business of managing a buy-to-let portfolio isn’t.

Gary Wilkinson, Redwood Bank CEO, said “While investing in property is appealing, it not straightforward and is challenging. At Redwood, the most successful property firms we see are those with directors or owners who understand and have experience in the property sector and have professional advisers supporting their business.

“Obtaining professional advice before becoming a landlord is key. A good commercial broker will take the time to consider your personal experience and background. They will explore with you the business you want to create and your goals and help you get the right mortgage deal.”

Phil Gray, managing director of Watts Commercial Finance, the multi-award winning commercial finance brokerage, said: “Buy-to-let property is an appealing way for retirees to supplement their income and leave a legacy. However, starting out as a landlord requires careful planning. At Watts Commercial, we guide clients through key decisions like property type – whether single buy-to-let, HMO or semi-commercial and help them navigate the complexities of borrowing, especially for those in retirement.

“By working with specialist lenders, we provide tailored solutions for those who don’t meet standard high street criteria. With the right advice, retirees can successfully enter the property market and generate a stable income in retirement.”

Gary added: “Specialist lenders, such as Redwood, are now a core part of the mortgage market. Those looking to become encore entrepreneurs as buy-to-let landlords will greatly benefit from building the right team of advisers around them; finding the right broker, accountant and lender is key to success. With the right support, entering the property market as a landlord can be a fruitful way to get creative in your retirement and generate additional retirement income.”