Letting family home 'can ease retirement burden'
by Sarah Ashcroft
Selling off the family home to free up capital is not the only way to increase retirement income. People approaching retirement can also choose to let their property to provide a much-need subsidy to their pension pot, according to the Association of Residential Letting Agents (Arla).
It argues that by signing a tenancy agreement
, people can earn money without being forced into selling their property or releasing equity.
Retirement income is a concern at the moment as the rising cost of living eats into pensions. New figures from Saga, for instance, suggest pensioners' purchasing power has fallen by 20 per cent since the start of the credit crisis.
The organisation said it was "deeply concerned about how these abnormally high levels of inflation are impacting pensioners in particular".
According to Knight Frank, rental returns currently stand at 6.1 per cent, beating the return on other types of investments.
"With many potential buyers struggling to secure a mortgage, letting your family home rather than selling offers a strong alternative," says Arla president Tim Hyatt.
He added: "While market conditions remain so inclined, it could be prudent to let out the family home, and use the monthly rental income to invest in renting a smaller retirement home."
Arla has offered tips to anyone who is considering renting out their home. It says it is vital to notify the mortgage provider, as letting out a property requires a different form of mortgage from owner-occupation. "The same applies to insurance, as your buildings and contents may not be covered unless you discuss this change with your provider first," explains Arla.
It is also essential to sign up to Deposit Protection, which has been mandatory for all landlords since April 2007.
Arla suggests would-be landlords should check the state of their electrical appliances to ensure they are safe and up to standard. A fire risk assessment
and property inventory
should also be carried out.
- Landlord and Tenancy News from Lawpack: Solicitor-approved tenancy agreement template with expert guidance on how to complete the legal form
Published on: December 16, 2011
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