People enrolled in a workplace pension scheme can withdraw some or all their pension pot and invest the money, and many elderly people are considering purchasing buy-to-let property as an investment.

Although buy-to-let investing can be profitable, like with any new business venture, a detailed business plan needs to be written. The rents received must cover all the landlord’s costs: maintenance, repairs and commercial mortgage repayments. There will also be capital growth from an increase in the value of the building.

There are risks, but these can be kept to a minimum. Professional financial advice is useful to make sure that any proposed buy-to-let property purchase will be profitable. If the property is cheap, then money may need spending on refurbishments.

The administration of the buy-to-let business can take time. If a pensioner has an income of £10,000 or more, they need to file an HMRC tax return, which includes income from their buy-to-let business. The landlord can deal directly with tenants or use a letting service, but these services will charge a percentage of the rent received.

If the pension lump sum is not enough to purchase the property, funding needs to be acquired. A mortgage broker will be able to arrange the most suitable buy-to-let commercial mortgage deal.

Buy-to-let property can be an effective way to invest pension savings when someone retires but they need to be aware of the risks and formulate a sound business plan that minimises them.