Posted on 23rd May 2014

A New Generation of Silver Landlords

By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors

The pensions overhaul announced by the Chancellor in the last Budget could result in a whole new generation of older so-called silver landlords. Savers aged 55 or over will be able to withdraw their entire pension pot as a cash lump sum from next April, which could potentially lead to a surge in the buy-to-let market. Property remains a favourite for many looking to maximise the return on their savings. As interest rates are likely to remain low for the foreseeable future, rental yields will continue to outweigh savings rates making property a good option.

If this investment does take place, letting agents may well see an incremental boost to their own businesses. With that boost comes responsibility as these silver landlords are going to need sound advice before plunging their life savings into potentially risky property investments.

There is of course no fool proof way of ensuring a tenant wont fall into arrears, however a system that factors in the prospective tenants likelihood to default as well as checking a large number of databases will enable the agent to pass on a far more detailed and accurate reference. This will then enable the landlord to make a well-informed decision based on financial fact.

It will also be important to ensure that they have considered and understood the value of rent guarantee insurance. After all, even the best tenant can get behind on their rent if their circumstances change unexpectedly. Insurance cover can provide a valuable safety net if things do go wrong and can help ensure that the landlord is not out of pocket, which will be particularly important if the landlord has chosen to invest their pension in property and the returns form a major part of their annual income. It is advisable that as well as having all the necessary insurance in place, they seek advice on managing for their assets for the longer-term.

If there is a surge in silver landlords then its doing to become an even more competitive marketplace for letting agents. Its going to be worth making sure they have as many strong selling points under their belt to win and hold on to their fair share of this new generation of older landlords. It is also important that these silver landlords are not choosing to enter the buy-to-let market as a matter of necessity. Rather, it should be a positive decision based on maximising potential retirement income, rather than a case of being backed into a financial corner.

Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks.