Retirees made up almost three-quarters (73 per cent) of all landlord sales last year, with the number of retiring landlords forecast to grow in the years ahead.
Figures released from the estate agent Hamptons yesterday (April 17) showed it is predominantly older investors who are leaving the buy-to-let market with the average landlord now 60 years of age.
According to Hamptons' estimates, around 140,000 landlords retired in 2022 - accounting for 73 per cent of all landlord sales.
The estate agent expects this figure to rise over the coming years as around 96,000 landlords turn 65 in each of the coming years across Britain.
The rental sector in Britain is made up of approximately 2.75mn landlords, with the majority of these investors having entered the market 15 to 25 years ago following the introduction of the buy-to-let mortgage.
Today, 51 per cent of all buy-to-let mortgages were taken out between 1996 and 2007.
Hamptons notes that it is this cohort of ageing investors who are now increasingly likely to “sell up and cash out” and “leave behind a gap which is not being filled by new landlords entering the sector”.
The estate agent also noted that while there is no evidence to show that tax and regulatory changes have not driven a buy-to-let sell off, they have stemmed the next generation of landlords.
According to Hamptons, the number of new purchases by landlords has remained relatively muted while millennials who have struggled to get onto the housing ladder have not been in a position to afford purchasing a buy-to-let property.
Commenting on the figures, mortgage adviser Hannah Bashford from Model Financial Solutions said although the report is not surprising, reaching retirement age does not automatically mean a buy-to-let investor will choose to sell.
“Many 'casual' buy-to-let investors have taken interest only mortgages with a set term, so when that term is up they think that they either need to sell or pay off the mortgage in another way, but this doesn't have to be the case because unlike residential mortgages the age of the investor isn't as much of an issue,” Bashford told FTAdviser.
“This is because the income is not based on them and their capability to work, it is the rental income that is used for calculating affordability.”
Bashford also explained why some of her clients have chosen to explore selling their buy-to-let investment in recent times.
“We have seen a few clients looking to sell their investment upon retirement and this has been to pay off another investment mortgage so they then have an unencumbered property or to give the funds to their children to help them with their own property purchase,” she said.
jane.matthews@ft.com
