Most owners view their properties as retirement investments, according to the latest English Private Owners Survey 2021.
It notes that 54% of owners consider their housing “as a long-term investment to contribute to their retirement”, underlines the report published by the Ministry of Planning, Housing and Communities. This figure rises to 58% among rental owners.
But despite rising house prices, homeowners shouldn’t become “too dependent on real estate” for their retirement, as maintaining properties can be expensive and heavy real estate investments leave them vulnerable to crashes. stock market, according to an analyst.
UK house prices jumped 9.8% in March on an annual basis, with the average property valued at £278,000, according to the latest House Price Index data from the Office for National Statistics released earlier this month.
The number of private rental dwellings in the country jumped by 45% between 2008-09 and 2020-21, reaching 4.4 million households. The private rental sector is now the second largest tenure in England, containing 19% of all households, up from 14% in 2008-09, when it was smaller than the social rental sector.
The report finds that 43% of owners owned a rental property, accounting for 20% of rentals. At the other end of the scale, 18% of owners owned five or more properties, accounting for 48% of all rentals.
The average owner is likely a white male with a median age of 58. The study reveals that 55% of owners are male and 88% identify as white.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, says:“The strong growth in property prices in recent years has led many to declare their property their pension and this love affair is evident in the large number of owners who seek to use their property portfolio as income from retirement.
“However, it is important not to depend too much on real estate for your retirement. The market has remained buoyant for years but that doesn’t mean it will always be that way and if we had a market downturn investing all your money in real estate could see your investment plummet . You might also find a property difficult to sell, which could be particularly difficult if you need to sell quickly to finance long-term care, for example.
“Owning can also be costly with stamp duties, legal fees and ongoing maintenance that accumulate over time. A second property will incur additional costs such as higher stamp duty and you will also be taxed on rent and any profits when you have just sold.
“If you plan on being a homeowner in retirement, you will need to consider the work that being a homeowner entails and if you are unable to do this, you will need to pay someone who can. It is important to have a long-term vision of these costs when deciding to take the leap into becoming an owner.
“Some may find pensions inflexible – money invested cannot be touched until at least age 55, but it’s also important to remember that contributions are tax breaks and investment strategies are well diversified across geographies and sectors.
“This can provide real peace of mind when investment markets are volatile. Not being able to touch the invested money also means that it benefits from long-term investment growth which can have a significant impact on your retirement income.
“Property can play an important role in retirement planning, but care should be taken not to over-rely on it to the detriment of pensions.
The Survey of Private Owners in English is an online survey of more than 9,000 landlords and rental agents, who uploaded the data for its report in January 2021.