Your property retirement plan

26th January 2018 posted in Sellers

Why have a property retirement plan? 

In 1995, according to the government’s UK HPI index, the average property price in England and Wales was £52,623. Latest data for November 2016 showed the average property price was £229,100*. That’s an increase of 335% in just over 20 years. 

Add to this the opportunity to let a property at 5% or higher yield, property has delivered good investment returns, over time. Typically, the two rules of thumb for property investment success are to:
1. Keep the property for as long as possible
2. Gear your property investment to boost returns.

Keeping your property as long as possible 

Buying a property as a home owner or as an investor can, as long as the market continues to rise, give good returns over time. 

This is because in the UK, in the main, there are more people chasing properties than there is stock available. This creates a ‘natural’ auction. The richer people become, the more they can offer to secure a property in short supply. And, as long as they are confident property prices will continue to rise, they will continue to pay more for homes.

This shortage of supply and increase in people’s wealth to date is effectively what has driven property prices up by 335% over the last 20 years. 

Gearing your property investment

Together with benefiting from natural price growth over a long period of time, the fact that you can gear a property investment can in many circumstances allow you to secure a good return versus other ventures.

For example, to buy a £150,000 property (or asset) with £50,000 (covering the cost of equity, buying and stamp duty tax at 3%). If the property’s value rises by 10%, then you earn a return of £15,000.
£15,000 as a percentage of £50,000 = 30% on the cash you have invested 

This is secured when you sell, before costs and tax.

This can work for you whether you own the property and live in it, or you decide to rent it out and use the income to cover running costs. You may possibly earn some additional income, but can take advantage of any increase in the property’s capital value, or pay off the mortgage on the property, securing increased income at a later date.

*Source UKHPI Data


What is involved in your retirement plan?

1. Why consider investing in property long term?

2. Have a retirement property plan

3. Buy a home you want to retire to now

4. Pay off your current mortgage and retain your existing home

5. Buy other properties to generate cash for retirement 

6. Consider trading down to a retirement home or village