Selling off the family home when it is time to retire is not the only way to gain a substantial nest egg to use towards retirement. You can also start contributing into a personal pension in addition to your occupational pension, as savings have been hard-hit by the financial climate.
In addition, Association of Residential Lettings Agents (ARLA) made a statement targeted at pensioners to ensure that they are aware of the option of letting their home out.
If you are looking for another way to boost your retirement income, consider speaking to an expert about your investment options through our pension enquiry form.
At the moment, the housing market is tough for both buyers and sellers, which can make the climate just right for people who already own properties to start renting them.
For property sellers, such as pensioners who need to boost their pension income, there is extraordinary risk in selling with the intent to move into a smaller home. In some cases there may be no available houses in the same area that will net pensioners a substantial profit after selling their home.
This means that some selling their homes will be forced to leave the area in which they have spent decades. There is also the matter of the depressed housing market, which has wiped as much of a third off of the value of some homes.
The same woes affect potential buyers, who often find it hard to secure a mortgage as lenders become increasingly risk-shy. Those who have the good-standing credit for a mortgage still need to accrue a hefty deposit, which means putting aside substantial savings at a time when household budgets in Britain are the most squeezed.
Because of both of this, the demand for rental properties is going up, which means good news for pensioners who are looking to rent their family homes rather than sell them.
Return on investment
The ARLA has said that the average return on investment for rental properties reached 6.1% this year, which is substantially more than many savings accounts or traditional pensions can boast.
If you are looking for a non-traditional savings route for retirement, consider getting a self-invested personal pension, which puts you in control of your investments.
The ARLA also reported that “achievable rent levels” are rising, and demand for good quality rental properties has remained high throughout the financial crisis.
In the face of these market conditions, it could be advantageous for pensioners to let out their family home. The rent money from family homes could be used to provide smaller accommodations, with money left over to tackle necessities such as food and fuel that are rising in cost.
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