{"id":156144,"date":"2025-09-23T19:53:08","date_gmt":"2025-09-23T19:53:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/156144\/"},"modified":"2025-09-23T19:53:08","modified_gmt":"2025-09-23T19:53:08","slug":"the-homeowners-who-rely-on-their-properties-to-fund-retirement","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/156144\/","title":{"rendered":"The homeowners who rely on their properties to fund retirement"},"content":{"rendered":"

\n\t\t\t\t\tMany property owners, especially those in London, find themselves with homes that have grown substantially in value which is helping them plan for retirement\t\t\t\t\t <\/p>\n

Homeowners are increasingly relying on their properties to fund their retirement<\/a>, new figures show.<\/p>\n

The issue is particularly acute in London, with 56 per cent of homeowners saying they plan to use their property to pay their way through retirement, according to research by Annuity Ready.<\/p>\n

This is double the national average, with around 28 per cent of Brits across the UK saying they intend to use their homes to help pay for retirement.<\/a><\/p>\n

Many older generations bought property when it was far cheaper than it is today, with those in London often sitting on properties worth hundreds of thousands of pounds more than they were bought for.<\/p>\n

This means that they could end up with a considerable cash lump sum if they chose to sell it, or they could rent it out and continue receiving a sizeable income in retirement to supplement their pension.<\/a><\/p>\n

It comes as around 15 million people are believed to be under-saving for retirement, with retirees in 2050 on course to receive around \u00a3800 less private pension income than today\u2019s.<\/p>\n

However, experts have warned that while the next generation of retirees may have property to fall back on, future generations may not \u2013 or at least they will not see the huge increases in values that older generations have benefited from.<\/p>\n

Sarah Lloyd, commercial director at Annuity Ready, said: \u201cMany people are banking on their homes to support them financially in retirement \u2013 whether that\u2019s through downsizing, equity release or letting out a spare room. <\/p>\n

\u201cHowever, the use of property as a pension to supplement more standard forms of pension savings is becoming increasingly less likely for the younger generations.<\/p>\n

\u201cThis is all the more reason why we\u2019re urging people across the UK to take stock of their finances early and get clear on their options.\u201d<\/p>\n

\u2018I\u2019m 46 and not planning to save into a pension\u2019<\/p>\n

Jazz Gandhi, 46, is one such person who is not planning to save into a pension for retirement \u2013 instead prioritising her property as a means to get by. <\/p>\n

She said: \u201cMany employees\u00a0move between jobs and pay into a pension scheme, so managing that pot becomes complex,\u201d adding she will not invest in a pension aside from paying National Insurance contributions to claim the state pension later in life.<\/p>\n

\"\"Jazz believes her property will retain its value (Jason Joyce)<\/p>\n

Jazz, a PR director, bought a flat in West London in 2008 and is \u201cquietly confident\u201d it will hold its value. <\/p>\n

\u201cI\u2019ve also\u00a0chosen to be single and child-free, so my property assets should be enough to help fund a comfortable retirement. But I\u2019ll probably end up working to cover bills anyway.\u201d<\/p>\n

She said investing in traditionally tax-free options like champagnes and wines is one of her preferred ways to hold tangible assets, but added she is not a high net worth individual.<\/p>\n

\u201cI was raised in poverty in this country, but I have been taught by my mother how to make the pound stretch and to budget wisely. Financial anxiety is not discussed enough in our workplace or country.\u201d<\/p>\n

How to build up retirement savings<\/p>\n

There are ways you can save up for retirement without needing to rely on property.<\/p>\n

Contributing to a workplace or personal pension is a great place to start. By contributing to a workplace pension, you benefit from free cash from your employer and also the government via pension tax relief.<\/p>\n

This is where the Government adds a 25 per cent top-up to your pension contributions, so for every \u00a3100 you pay in, you get an extra \u00a325. This increases if you are a higher or additional rate earner.<\/p>\n

By contributing to a personal pension, you will not get employer contributions, but will still get pension tax relief.<\/p>\n

Investment firm M&G found that someone who begins saving at age 23 could build a pension pot worth \u00a3596,000 by retirement age, assuming they consistently contribute around 8 per cent of their salary.<\/p>\n

\u2018Our pension pots won\u2019t be enough\u2019<\/p>\n

Renata, 57, from East London, said she plans to rent out her home in London to fund her retirement, as she does not have enough pension saved.<\/p>\n

She and her husband have lived in the area for the best part of 30 years and have two grown-up sons.<\/p>\n

Over the last few years, they have been taking stock of their finances in preparation for retirement, including savings, property-based assets, pension pots and other sources of income they might be able to draw upon once retired.<\/p>\n

\u201cMy husband and I plan to use property to supplement our retirement income, mostly through renting,\u201d she said.<\/p>\n

\u201cHaving been partly self-employed for the last two decades, our\u00a0pension\u00a0pots alone likely won\u2019t be enough to get us through retirement, so having property to tap into will be helpful.<\/p>\n

\u201cBut buying in London is much harder now; people are paying a lot more for a lot less. So, using property for pension\u00a0income might not be as accessible for future generations.\u201d<\/p>\n

That assumes investment growth of 5 per cent each year, which is the average amount the stock market has increased over the past 10 years.<\/p>\n

The minimum you can contribute through auto-enrolment is 8 per cent, with a minimum of 5 per cent from you and 3 per cent from your employer \u2013 although your employer can choose to pay a higher split, for example, 4 per cent each.<\/p>\n

However, the more you contribute, the more you will get in retirement \u2013 and this can quickly ramp up through compounding.<\/p>\n

Anusha Mittal, managing director of individual life & pensions at M&G, said: \u201cStarting to save when you begin working is one of the most powerful financial choices you can make.<\/p>\n

\u201cEven modest contributions in your 20s can grow into something substantial over time, especially when matched by your employer.\u201d<\/p>\n

You could also consider tracking down and consolidating lost pots to ensure you don\u2019t miss out on any pension savings and that you are paying the lowest possible fee.<\/p>\n

If you moved a \u00a320,000 pot from a scheme charging one per cent interest to a scheme charging 0.25 per cent, you would save \u00a31,500 over 10 years \u2013 without factoring in pension growth.<\/p>\n","protected":false},"excerpt":{"rendered":"Many property owners, especially those in London, find themselves with homes that have grown substantially in value which…\n","protected":false},"author":2,"featured_media":156145,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,25949,4178,4174,4175,2295,4204,56,54,55],"class_list":{"0":"post-156144","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-mortgages","11":"tag-pensions","12":"tag-personal-finance","13":"tag-personalfinance","14":"tag-property","15":"tag-retirement","16":"tag-uk","17":"tag-united-kingdom","18":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/156144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=156144"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/156144\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/156145"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=156144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=156144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=156144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}