Property plays a vital role for funding pensions

Property plays a vital role for funding pensions

15:31 PM, 25th May 2012, About 12 years ago

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Property investors with buy to let rentals and holiday homes expect to supplement their pensions with cash from renting or selling, according to a new survey.

Around 73% of over 55s expect to raise extra income or cash in their retirement from property, says the Equity Release Council, the trade body for equity release lenders.

Most over 55s (61%) regard their homes and other property as a key part of their retirement planning – with 17% looking forward to cash from rents and 7% selling up their portfolios.

Many homeowners relying on property to provide pension cash may have unrealistic financial expectations.

Downsizing is the most popular option to release cash – but a separate survey by the Royal Institution of Chartered Surveyors (RICS) points out that the housing market is stagnant mainly due difficulties buyers are finding in raising a mortgage and substantial deposits.

RICS expects homeowners will have difficulties selling for sometime while the mortgage market rebalances.

Other options for releasing retirement cash from property considered by homeowners approaching retirement include taking in lodgers (10%) and equity release (7%).

The survey also discloses far more people look at equity release (55%) than actually sign up to unlock cash from their homes.

Other important sources of retirement income for the over 55s are employer pensions (44%), private pensions (39%) and savings and investments (36%).

State benefits are a lifeline for more than a quarter of over 55s (27%) who do not have adequate retirement savings.

Nigel Waterson, chairman of The Equity Release Council, said: “This research clearly shows that more and more people are considering using their property as part of their retirement finances. This might mean choosing to downsize, rent a room out or use equity release in any combination.”

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