Real estate investing as the pension plan becomes more popular

A growing number of people approaching retirement age are using real estate investing as a nest egg. Why is UK housing considered such a safe investment?

According to a recent report by Paragon Bank. Real estate investment in the age group increased by 52% between June 2020 and June 2021, which is more than in any other age group.

This increase in home purchases for people approaching retirement age is a clear indicator of the confidence still felt in the UK housing market. Today, with savings rates at historic lows and notoriously volatile stock markets, a well-advised real estate investment is an asset that can reap the best rewards for homeowners.

However, young rental owners are still eager to invest, according to the report. Indeed, despite the rise of older investors, the majority of rental owners are in the 35-50 age bracket.

One of the main reasons for the growing number of elderly homeowners could be an increase in the number of people retiring early or being made redundant, says Richard Rowntree, managing director of Paragon Bank. With some industries hit hardest by the pandemic, there could be more people choosing to use the property to boost their pension fund to replace previous income.

Rowntree adds, “Or it was just experienced homeowners who took advantage of the stamp duty holiday to reduce their purchasing costs. Of course, unfortunately, the inheritance can also give rise to a one-time boost.

“While there has been a sharp increase in the number of older homeowners purchasing new homes, it was also encouraging to see the majority of purchases in absolute terms being made by people between the ages of 35 and 50. This suggests that there is a strong pipeline of young, growing homeowners. wallets.

Borrowing options for senior homeowners

While younger investors will have more mortgage options available to them, mortgage products later in life are growing. At Paragon Bank, the maximum age limit is 85, which means buyers between the ages of 60 and 64 still have around 20 years to repay their loans.

Borrowers are more likely to be accepted by lenders if they have a good credit history. Higher income is of course another bonus when taking out a mortgage. Lenders tend to view older borrowers as a riskier option, so buyers need to be able to prove their ability to pay off their mortgage.

Other options include life or parole mortgages. This is where you free up money in an existing property that you can then spend. You pay off the mortgage when you die or move into a care home with the sale of the property.

Benefits of investing in UK property

For many investors, the UK property market continues to be viewed as a safe place to keep your money. Especially since savings rates remain low, the returns as well as the capital growth that you can get from bricks and mortar are very attractive.

Monthly and regional fluctuations aside, UK house prices have only increased over the past 10 years. The UK rental market is also strong and people are now renting longer before buying. A high number of tenants means high demand, which translates into good returns across the country, but particularly in some places.

In terms of annual price changes, London recorded the slowest increase in value. Regions such as the North West, North East and Midlands have all seen more dramatic increases in house prices in recent years. As the government continues to focus on “Upgrade“, and the more emphasis is placed on areas far from the capital, this trend is expected to continue. Cities in the north and the Midlands are also more affordable, meaning investors may have a much lower starting point. to make a successful real estate investment.

BuyAssociation offers a range of real estate investment opportunities available across the UK. Browse some of our current offers or contact us for more information.


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