Almost a quarter of landlords plan to sell up over the next 12 months as buy-to-let loses its shine and becomes increasingly difficult to navigate.
That’s according to the National Residential Landlords Association, a trade body. Property investors face tougher tax rules, extra cost to make green upgrades and tighter restrictions on evicting problem tenants. This has resulted in some going for months without income.
For Anthony Crowther, a former Royal Air Force flight engineer, managing physical property has become too burdensome in retirement.
The 62-year-old from Oxfordshire has sold one of two buy-to-lets for £632,000, because of tax changes that squeezed his rental income. “I was on continuous duty with my squadron for over a decade,” he said. “This included the invasion of Kuwait, the first and second Gulf wars and a tour of Afghanistan. I lived in military accommodation, so we invested our savings in properties at home.
“They have been very good investments for us, but taking an hour-long drive to go and manage the property in our golden years has become a headache.”
Mr Crowther joined the forces not long after he turned 17 and served for some 32 years before he moved into teaching aviation and worked on aircraft including the C-130 Hercules and L-1011 TriStar.
He and his wife have finally settled in a self-built house in the Cotswolds and live on comfortable pensions. Still a keen advocate of the DIY ethos, Mr Crowther wants advice on where to invest and manage his buy-to-let profits, which are currently sitting in a cash account, even though interest rates are at record lows.
“I want the money to at least keep in line with rising inflation,” he said.
Rob Burgeman, investment manager at Brewin Dolphin, a wealth manager
Given that Mr Crowther’s income is fully covered by generous and reliable pensions, and he already has a cash buffer, he is able to invest all of his profits.
However, the sum he has to invest far exceeds the annual Isa limit of £20,000. Isas protect investments from taxes on income, dividends and capital gains, although they are not exempt from inheritance tax. Mr and Mrs Crowther should combine allowances, meaning they can move £40,000 now, and then every tax year. This will reduce their tax bill over time, though in the interim they will have to pay capital gains tax on any profits above the £12,300 annual allowance. CGT is paid at 10pc or 20pc of profits, depending on whether you pay basic-rate or higher-rate income tax.
For his portfolio, he should invest 20pc in bonds, 30pc in alternatives such as infrastructure and 50pc in stocks.
We favour bond funds such as Jupiter Strategic Bond, which yields around 3.6pc. Mr Crowther also needs inflation-linked government bonds, which offer protection against rising interest rates. The DBX Global Inflation-Linked Bond (GBP Hedged) ETF has a balanced approach. He should put a 10th of his savings into each.
