Retirement: Relying on property to help fund your retirement? You’re not alone


Relying on property to help fund your retirement? You’re not aloneTwo new surveys have shown the extent to which people are relying on property to help fund their retirement.

The first, by More 2 Life, found that 41% of people approaching retirement are now including their property wealth as a key part of their retirement planning.

The second survey, by Key Retirement, shows that retired homeowners have seen their combined property wealth increase by £33 billion in the last six months alone. The astonishing rise is equivalent to an average of £1,200 per month per pensioner.

The research went on to show that over the past five years, the property assets of pensioners have increased by a staggering £81 billion; equivalent to over £17,000 per pensioner.

How can property investments help your retirement?

There are two key ways in which pensioners generally use property to help fund their retirement:

Family home For most people the family home is their largest asset. But to access its’ value, which is of course tax-free, it often has to be sold, a smaller property purchased and the remaining cash invested to provide an income. Of course a similar sized property could be bought in a cheaper area, achieving a similar result.

Another option for people who don’t want to sell their home is of course to rent part of it out, which if done correctly, could produce a tax-free income under the Government’s rent a room scheme.

Buy to Let The British obsession with property has resulted in a Buy to Let boom over the past few years, with ever increasing numbers of people taking the plunge to become landlords. The main attraction is that Buy to Let is a tangible investment, which hopefully produces a yield from the tenant’s rent as well as capital growth.

Of course Buy to Let isn’t without its’ problems. Tenants can be problematic, rent can go unpaid and the maintenance costs can mount up. Furthermore, property doesn’t always rise in value and can fall back, just as any other investment.

It’s also worth remembering, that taking money from your pension under the new rules can be a very expensive way of buying a property to rent out and should only be done once you have taken expert advice.

So does property have a large part to play in your retirement planning?

If you own your home then possibly. But to access the value in any sensible way it usually means a house move, something which many people are unhappy to do.

For some people Buy to Let can also play a part. However, as with any single asset class, overreliance on property income can be dangerous. Furthermore, Buy to Let is more akin to a business which needs regular maintenance, rather than an investment, which can be checked maybe once or twice a year.

We’re here to help

If you would like help understanding how property can play a part in your retirement we are here for you.

Call Bev or Sarah today on 0115 933 8433 or email, we’d be delighted to hear from you.