Property a better investment than a pension

Property a better investment than a pension

As the supply-demand imbalance across the UK continues to push property prices upward, bricks and mortar is a better investment than a pension.

Summary:

  • Bank of England Chief Economist has stated that pensioners are better investing in property than a pension
  • Property can offer returns that are over four times higher than a standard pension
  • For pensioners looking to add property to their portfolio, Manchester offers investors the highest yields in the UK

Property is a better investment for retirement than a pension, according to the Bank of England’s Chief Economist, Andy Haldane.

Haldane believes that property is a more profitable option for retirement planning than a pension, stating: “As long as we continue not to build anything like as many houses in this country as we need to … we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.”

Money paid into pensions attracts tax relief at 20% for basic rate taxpayers, and 40% for higher rate taxpayers. Because of this, they are normally seen as the best way to save for a retirement income.

But as the rates available for savers turning cash into lifetime incomes have drastically fallen in recent years, a growing number of pensioners are becoming property investors in a bid to turn their savings into a higher income.

Investors in some areas of the UK can expect to receive around 9% a year income on their investment. This compares to over 55s buying an annuity, who can now expect to receive less than 2.5% a year, depending on their age and health.

Named by HSBC as the city offering the highest yields in the UK, Manchester is the perfect opportunity for investors to add to their portfolio and plan for their retirement. With a significant lack of supply in the city, demand from young professionals has seen rental costs continue to increase and yields outperform every other UK city, including London.

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