With the ability to unlock wealth from multiple properties now available, equity release could be just the boost the buy-to-let market needs.
Retirement Advantage Equity Release has launched the first set of products which allow owners of buy-to-let properties to release equity from those homes they let out.
This means that owners of multiple properties, who previously could not access the wealth tied up in them unless they sold them, can now do so in order to boost their retirement income.
Alice Watson, head of marketing at Retirement Advantage Equity Release, said: “Based on available data, we estimate there could be over £250bn locked up in buy-to-let properties that landlords over 55 could access via equity release.”
Property remains an attractive asset class overall, and with the ability to unlock wealth from multiple properties now available, equity release could be just the boost the buy-to-let market needs.
The buy-to-let market in the UK has grown substantially over the last decade or so. Figures from the Council of Mortgage Lenders (now part of UK Finance) reveal that the market has grown from 840,000 buy-to-let mortgages with a total balance of £93.2bn at the end of 2006, to 1.8million buy-to-let mortgages with an aggregate balance of £214bn by the end of 2015.
Watson said: “Recent changes to tax rules have affected buy-to-let owners. The phasing out of mortgage interest tax relief began in April 2017, with the amount of relief available to landlords gradually being reduced over the next few years.
“That said, there remains a sizeable cohort of people in the UK who own buy-to-let properties.”
Indeed, figures released in 2016 based on HMRC data estimate that there are 1.75million landlords in the UK in total. Even with the revision to its forecast, the CML still expects £35bn of buy-to-let lending in 2017 and £33bn in 2018.
Watson added: “The tax treatment of extra properties is changing and that explains in part why new buy-to-let purchases have fallen somewhat in recent months. But a boost for buy-to-let could be coming in the form of equity release.
“We have launched the first set of products which allow owners of buy-to-let properties to release equity from those homes they let out.
“Property remains an attractive asset class overall and with the ability to unlock wealth from multiple properties now available, equity release could be just the boost the buy-to-let market needs.”
