Are buy-to-let mortgages better than a pension?

More than 80% of British private landlords believe their property portfolios will offer a better income than a pension when they decide to retire.

Four in five property owners are convinced that selling off or letting out their portfolios will provide a better retirement income than a pension, according to new figures by BDRC Continental.

The independent Landlords' Survey found that landlords are placing their futures in the hands of the property market, but with falling annuity rates and underperforming funds who can blame them?

Happy to risk financial security

The survey found that 5% of landlords would sell off their whole portfolio whereas 20% are happy to put some properties on the market. Renting could be a stable way of securing a consistent income, especially as many people can't afford to buy property.

The HomeLet Rental Index recently found the average rent in Britain has increased by £111 since October 2009 to £679, although renting property in London is much more expensive. The average rent in the capital is £1,240 having risen by 6% in the last 12 months.

But not paying into a pension can mean you miss out on various tax-free benefits, including contributions from an employer if you're working, as well as the comfort of knowing you will have a reliable source of income in the future.

Can they afford to sell?

Those looking to rely completely on selling a property need to consider what may happen if, like now, many people can't afford to get onto the property ladder. House prices continue to rise and many people are increasingly finding it harder to buy.

Mark Long, director at BDRC continental, noted: "Landlords consistently tell us that they see their property portfolio as forming a critical part of their pension provision for the future.

"On average, landlords intend to remain active in the rental sector for another 15 years or so, and see a combination of capital gains and rental income as underpinning their pension strategy."

Dont go into buy to let hoping to make a quick buck, you may get your fingers burnt.  Speak to an mortgage expert, lettings agents and other landlords, most importantly.....do your home work.

Source:  www.mortgages.co.uk