Pension or Property?

When it comes to retirement, there is a long-standing debate – which is more lucrative, a pension or property?

With the UK population living longer than ever, the way you invest for your future is especially important.


As we all know, time really is money, so it’s likely you will want a retirement option that won’t take too much time to set up and maintain. Buying and selling property is very expensive and can be extremely time consuming; a factor that is out of your control. And it doesn’t stop there, for a buy-to-let property you will need to arrange the mortgage, find tenants you can trust, deal with the estate agents and maintain the property. You will also need to complete a tax return at the end of each year to declare any income from the property. 

As far as we’re concerned, a pension is much easier to set up, and is almost hands off for you as it can be left to us since we’re the experts. For us, it is definitely the option that people should consider when planning for retirement. Every UK resident under 75 is eligible, and it enables you to benefit from being very efficient as the government automatically boosts your pension contributions by 20% and any higher or additional rate tac relief can be obtained through your self assessment.

Although, please be aware that tax rules are subject to change and benefits depend on the circumstances of the individual.


Essentially, the most important aspect for everyone; we all want as much growth as possible. House price growth in the UK has generally slowed since mid-2016, but picked up in the latter half of 2019 with UK average house prices rising by 1%1 over a year from December 2018 to December 2019.

However, the UK stock market has actually grown even faster, rewarding investors with a return of 12.1%2 in 2019.

Inheritance Tax

A pension can be claimed by beneficiaries’ tax free if you die before the age of 75. If you die any older, your pension fund is still not usually subject to inheritance tax, but the beneficiaries will pay income tax at their marginal rate on any amounts withdrawn.

Property is part of your estate, which means when you die it may be subject to inheritance tax, especially if you’re assets exceed the current Nil Rate Band of £325,000.


Both the stock market and the value of property can fluctuate, so any investment has a risk factor. If you invest in a pension, there is a chance that you may get less back than you originally put in. At the same time, when buying a property, you are at risk  of being in negative equity if house prices fall. The tax benefits with buy-to-let properties are also becoming much stricter.

With a pension, there is the flexibility to choose the amount of risk you would like in your investments, so we can find the right portfolio to suit you.

Pension or Property

There is not necessarily one option that is better than the other, both have advantages and drawbacks, it just depends what is right for you. Investments are all about diversifying your wealth in order to benefit from potential returns in the future, therefore there is no reason why both pensions and property cannot work together as part of a diverse investment portfolio.

If you’d like to find out more about pensions please get in touch on 01858 791182.

*The figures were calculated by Numis and London Business School. They exclude rental and dividend yields and don’t factor in the costs of investing in each.

Your home or other property may be repossessed if you do not keep up repayments on your mortgage.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.  

Some buy to let mortgages are not regulated by the Financial Conduct Authority.

We would encourage you to get started!

If you want to talk this over, simply call us on 01858 791 182 or get in touch here.

Get in touch.

We work with many local business owners and directors across the Midlands, helping them and their families to become financially independent.

Whether you are a startup looking to scale or a seasoned business owner planning your next journey, we will take the time to understand your objectives and plan a course of action.

You can call us on 01858 791 182  or email us at the link below.

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Sovereign Wealth Limited is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website Sovereign Wealth Limited is a Limited company registered in England and Wales, Number 07115386. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.