Five million people to use property as their pension

Posted on August 12th, 2013 | Categories - News

iStock_000007148240_ExtraSmallNew research has shown the number of people planning to use property to provide an income in retirement is on the rise.

A study by asset manager, Barings, has found 13% of people, plan to rent or sell property to help fund their retirement; the figure is up from 11% last year and equates to around five million people.

The research also found 5% of people plan to sell their existing home and downsize, presumably to release equity for investment to then provide an income in retirement.

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Property as a source of retirement income has clearly becoming a more popular option since the financial crisis. Currently only 35% of people surveyed say they never plan to use property as a source of income in retirement. However, in 2009 59% of people said they had no plans to use property to help fund their retirement.

Commenting on the study, Marino Valensise, Chief Investment Officer at Barings, said: “This year’s survey indicates that more people are investing in property as a retirement source and the concern is that this could mean they are over-concentrated in the asset class.”

“It is worrying that the number of people relying exclusively on their property to fund retirement has increased. Property prices can be volatile so putting your faith in your home to fund retirement is risky.”

Valensise continued: “Investing for your retirement is about long-term planning and, as people are living longer, more emphasis needs to be put on how a lengthier retirement will be funded.”

“It is imperative that people diversify their investments through a range of assets, which can, of course, include property.” (Source: Telegraph)

Buy to let mortgage boom

The research from Barings comes in the same week the Council of Mortgage Lenders (CML) revealed figures showing the extent of the boom in the buy to let mortgage market.

According to the CML, the number of new buy to let mortgages being granted is now at the highest levels since 2008, as buyers take advantage of low interest rates, low property prices and continuing demand from tenants.

Do you plan to use property to fund your retirement?

Are you one of the five million people planning to use property to help fund your retirement?

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If you would like advice on your options please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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