Investing in the buy-to-let market for student accommodation can be a way of boosting pension income.
Paul Thomas, writing for ThisIsMoney.co.uk in September 2016, has explained how retirees can supplement their retirement income by investing in the student buy-to-let market.
Thomas writes that pensioners are looking for alternate investments as saving interest is at a record low rate, with 1% from banks, 5% from a pensions annuity and 4% on average from stock market shares.
Investors can expect buy-to-let returns from 6%, and in some university towns, this percentage is higher still. Thomas cites a study from property investment firm Property Partners noting that landlords renting to students can make an average of 10.6% returns in Sunderland and 9.1% in Teesside.
Talking to ThisIsMoney.co.uk, property expert Henry Pryor said that rents from students sharing accommodation are higher than those paid by families living in a house.
Pensioners can withdraw all or a portion of their pension savings when they retire, and many are attracted to investing their pension lump sum in property. Thomas warned, however, that property investment is not easy. There is extra stamp duty to pay, properties will require a lot of maintenance and new tenants must be found each year.
If landlords want to take some weight of their shoulders, properties can be managed by an agency, which will usually charge between 10 – 15% of the rent. A residential or commercial mortgage broker can be used to find the best buy-to-let mortgage.