Traditionally, equity release has been used by buy-to-let landlords. Every three years or so, they remortgage and get their property - or properties - revalued.
The equity they release they then use to live on or invest into another portfolio property.
“In retiree terms, this means the extraction of cash flow with no tax on it. It’s a useful source of funding,” said Hannah.
Buy-to-let investors flocking to new builds
But the tax boss warned that any retiree looking to get into the buy-to-let space needs to evaluate their investment.
“I met a man in Essex who purchased a HMO [house in multiple occupation] in Leeds. He didn’t realise he had bought a Grade 2 listed house and needed to pay massive costs in refurbishments.
“He was a retired train driver. He said he rushed it.”
The raft of tax and regulatory changes, while making it harder for landlords to operate profitably, have steered many buy-to-let investors to new builds.
“Ironically this is where first-time buyers are also looking,” said Hannah, suggesting any surge in buy-to-let purchases will squeeze an already stretched housing supply.
"If you look to invest in a property which is less than five years old it should limit the amount of extra work you would need to do."
Currently, 40 per cent of landlords in the UK are aged 55 and more than half of them consider their rental income to be a key part of their retirement income, according to the National Landlords Association.
ruby.hinchliffe@ft.com
