More than 1 in 4 prospective landlords don't know how get started

The research shows more than half (54%) of over-40s retirement savers would consider investing in buy-to-let to increase their income in retirement providing some support for the much mooted talk that a wall of money is heading for buy-to-let following the launch of pension freedoms.

When it comes to choosing the right product, around 44% would use a broker to source a buy-to-let mortgage while 28% would go to their existing lender.

Kensington analysis of average flat and maisonette prices across England and Wales shows the 25% deposit need for a first-time landlord taking the plunge following pension freedom is nearly £43,000. It ranges from £8,128 in Blaneau Gwent in Wales to more than £104,000 in Greater London.

Would-be landlords considering investing pension cash believe the risk of failing to achieve a comfortable level of income is the biggest risk. Around 47% of those questioned are concerned about the risk of not achieving the income they want followed by 42% who fear investing in buy-to-let could mean running out of money in retirement.

Around 25% are concerned about the income tax implications of withdrawing pension cash to invest while 21% fear they will not understand the rules on buy-to-let.

Steve Griffiths, Head of Sales and Distribution at Kensington, says: “The outlook for the buy-to-let market is bright and the potential for further growth as pension freedoms come into effect is undeniable. However the would-be landlords will need to be realistic and it is worrying that so many are considering buy-to-let without knowing how to apply for a mortgage. Advice from brokers on mortgages is vital.

Claims of a wall of money are unlikely to come true and in any case raising a 25% deposit for a buy-to-let mortgage from pension funds will be tough as a look at average property prices across the country shows.”

The table below outlines the average price of flat or maisonette across England Wales and the lowest average price in the region.