Retirement strategy: What part does your property play?

Many homeowners consider their property to be their pension – but does locking away your retirement fund in bricks and mortar carry certain risks? We investigate.


  • Over the past year, house prices have taken an upturn due to a range of factors.
  • It’s not uncommon for people to consider their property to be their pension – but a strong retirement strategy calls for diversification.
  • A financial adviser can support you at every stage of retirement and help ensure your investments are tax-efficient.

House prices grew at an average of 10.2% in the year to March – no doubt welcome news for many UK homeowners.1

The rise can partly be attributed to the Stamp Duty freeze that will begin to ease off between July and October this year. This could see house prices levelling off as the freeze lifts and demand balances out at a more normal level.

But what does the recent increase in house prices mean for the role of your residential property in your retirement strategy? Many people think of their property as their pension, on the basis that it’s often owned for a number of decades with the expectation that its value will grow significantly over time. This is understandable, given that it’s often one of the biggest investments people make in their lifetimes.

However, it can be risky to plan to use your home to fund your retirement. In the event of a lull in the housing market, a rise in interest rates or a change in personal circumstances, the financial returns you expect from your home when you eventually go on to sell it can drop.

Instead, why not view your property as one source of return within a diversified portfolio? That includes diversification within the asset class of property: income-generating property funds that invest in the commercial space can go a long way in spreading risk and return across the sector.

A more tax-efficient way of using your investments at the point of retirement is spreading your assets across a range of wrappers (e.g. ISAs, unit trusts or pensions).

Here at Wellesley Wealth Advisory, we can help you track the tax-efficiency of your investments as you navigate your way through retirement, and help ensure your goals and objectives are on target.

Property can be a valuable source of income and it can play a crucial role as part of your retirement strategy. If you want to maximise it to its full potential, seeking financial advice is your best starting point.


1 Source: Office for National Statistics, ‘UK House Price Index: March 2021’

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

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