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Can I fund my retirement with a Buy-to-Let property outside of London?

The property landscape is a rapidly changing thing, now more so than ever. The number of private landlords with a single property has dropped significantly over the past decade and changes in recent years have continued that trend.

Between the tenant fees ban and the complications that have arisen during Covid-19, many are wondering if purchasing a buy-to-let property is still a viable investment for retirement.

Is property a good investment?

The answer to this is, like all investments, it depends. Individual circumstances will vary from person to person and one article can’t account for all of the variables. That said, we can still talk about generalities.

Common knowledge has often suggested that the best way to invest in your future is through property. While that may be true in some circumstances, it doesn’t work for everyone. These are some of the advantages and disadvantages of using buy-to-let properties to fund your retirement:


Rental income - When you invest in buy-to-let, you’ll receive a rental income which, in some areas of the UK is as high as 8%.

Potential for capital gains - If the housing market rises, you could end up growing your capital with the increase in your property’s worth.


Not liquid - The capital gained from an increase in the housing market is not liquid, which makes it difficult to access and utilise.

High maintenance - Becoming a landlord is a time-intensive investment and will require ongoing maintenance and attention.

Reducing returns - With new measures being implemented, you may find that the previously achievable levels of income are no longer feasible. This can be particularly true if you don’t get the right insurance to protect against income lost with an empty property.

As you can see, there are good and bad things that can come of investing in a buy-to-let property. If you think this is something you’d like to explore, be sure to talk to a financial adviser about your situation.

How has Covid-19 affected these prospects?

Regardless of the feasibility of buy-to-let acting as a fund for retirement prior to 2020, there can be no doubt that the events of this year have had an impact on this possibility.

While the urgency of payment holidays and compassionate decision-making have eased, Covid-19 has brought to the fore the difficulty with this kind of income.

Entering the world of buy-to-let may be especially difficult in the current landscape due to economic instability. As things are rising and falling, the housing market has reacted with safekeeping measures that can make it hard for buyers. This is especially clear in the high deposits that are currently required as well as the measure against borrowed or gifted funds to lay down a deposit on a home.

Investing in a buy-to-let property may still be a viable option for funding your retirement, but it is important to speak to an adviser before making that decision.

Earlier this year, the government released this document issuing guidance for both renters and landlords in response to the measures undertaken to manage housing issues during Covid-19.

What if I already own the property?

If you already own a buy-to-let property, some of the issues affecting the viability of this may not apply. That said, you will need to be aware of several changes that have come into play recently.

Letting fees ban

As mentioned previously, the introduction of the letting fees ban in 2019 has had an effect on private landlords in particular. Though the ban was introduced to prevent letting agents from charging excessive fees, landlords now find themselves faced with paying for referencing and inventory checks out of pocket.

Tax relief changes

At the beginning of this tax year, the mortgage tax relief changes that began in 2017 will hit a zenith. Now you are only able to subtract a flat credit of 20% of your mortgage expenses from your rental income when filing your tax return.

Section 21

Although no clear change has come into effect surrounding the repeal of Section 21 of the Housing Act, there has been enough interest to leave some potential landlords concerned. Section 21 allows landlords to end a ‘rolling’ tenancy by giving two months’ notice with no reason required.

This repeal would give tenants greater security, but may leave landlords without easy recourse for removing problematic residents.

Energy efficiency rules

As of April this year, all landlords are required to meet the Minimum Energy Efficiency Standards (MEES). This means that any property that does not meet these standards will require new measures to be added to the property.

Landlords will be responsible for increasing the energy efficiency of their properties up to a cap of £3,500.

Private residence relief

Some landlords may find themselves hit with higher capital gains bills when they sell their property. Changes to the residence relief rules now require that the landlord will need to be living in the property in shared occupancy with the tenant to qualify.

The economic landscape of 2020 is still being shaped by the events taking place globally. Utilising a buy-to-let property to fund your retirement may be a sound decision for your circumstances or it may prove to raise some difficulties. To know for sure how this option could work for your own situation, it is important to speak to an adviser.


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