/ BUY TO LET /
T HE SAYING “ SAFE AS
HOUSES ” appears to be the default headline for any financial journalist writing about property – and despite being more than 150 years old , it still retains its original meaning . Its first documented use was in John Camden Hotten ’ s dictionary of slang in 1874 , but it is believed to have gained popularity in the 1850s when used to describe the relative stability of property as an investment following the bursting of a bubble in railway stocks .
Property ’ s safe haven status has rarely been questioned since then , whether in literary works ( in James Joyce ’ s 1922 novel Ulysses , Leopold Bloom says : “ Landlord never dies they say . They buy the place up with gold and still they have all the gold .”) or by the Bank of England ’ s chief economist Andy Haldane , who last year raised eyebrows in the financial services industry when he stated that property was a better bet for retirement than a pension .
The general public appear to have a similar view – recently published results from the ONS Wealth and Assets Survey suggest that UK residents are looking to property as the “ workhorse ” of their pension savings , with 49 per cent of respondents citing it as the method of saving for retirement they believe will make the most of their money . This is compared with 27 per cent for employer and personal pension schemes , the second most popular choice .
Meanwhile , in a survey conducted by Wealth and Protection expert Drewberry on 2000 British workers , 24 per cent of respondents said they expected their property investments to help subsidise their retirement . Almost 8 per cent stated that buyto-let investments would deliver additional income in retirement , but twice as many thought the equity in their home would do the same thing .
Tom Conner , director of Drewberry , described this result as worrying .
“ We think that spiralling property values have created a false sense of affluence for many UK homeowners ,” he said . “ While it ’ s true that their biggest asset is now worth more than it once was , their home is an illiquid asset as well as their main residence . Based on average UK property prices , a retired couple that ’ s actually in a position to sell the family home and ‘ downsize ’ will be lucky to clear £ 100,000 after stamp duty , transaction fees and moving costs .”
Patrick Connolly , head of communications at Chase de Vere , agrees with Conner , saying that many people are forced to rely on property in retirement because they haven ’ t saved enough and it is through necessity rather than choice .
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