Should I buy more rental properties or start a pension at this late stage (at age 63)?

13 April 2022

Question by Maria

I don't have a pension as I have been relying on the income from my buy to let to provide my portion of household costs. My partner of 30 years has just left me so I am left significantly under prepared for retirement at age 63. Should I buy more rental properties or start a pension at this late stage?


Answered by Boring Money

Hello Maria,

I am sorry to hear that you are in this difficult situation. I can't provide a personal recommendation via this service; but here is some information in relation to the pro's and con's of property investment versus pension investing. Please do contact me if you require further help.

Property investing has the advantage of providing you with both income (rent) and hopefully a capital gain (increase in house prices) over time. However there are taxes you need to be aware of, you will in all likelihood already be declaring your rental income via your self-assessment tax return. Income you receive from rent is charged at your marginal income rate so 20%, 40% or 45%. Any property in addition to your main home will attract extra tamp duty on top of the normal rate. The first column shows the standard rate and the second the addition amount payable.

£0 - £125k 0% 3%
£125k- £250k 2% 5%
£250k-£925k 5% 8%

On sale of the property, you will also need to pay Capital gains tax. You can currently make up to £12,300 a year before paying CGT. After that, you’ll pay 18% if you’re a basic-rate taxpayer and 28% if you’re a higher-rate taxpayer.
House price increases can be attractive but as with any investment they are not guaranteed and tenant problems or house repairs can eat into profits.

Pension contributions benefit from tax relief. So for example a basic rate tax payer could pay a pension contribution of £80 and it would topped up by an addition £20; for those in higher tax bands more tax relief can be claimed back via self-assessment. Once contributed, the investments in your pension are sheltered from income and capital gains tax, which can make a significant difference to the value of your pension pot over the years. Generally pensions are invested in the stock market via collective investment funds. It is important that a pension in invested in a way that fits your appetite and capacity for risk. Given that your pension will be invested in stocks and shares, there’s risk involved. However, this risk is significantly less than with other similar investments, since tax relief adds such a sizeable bonus. Also you can move your pension into less risky investments as you approach retirement age, to reduce the risk of last-minute losses.

I hope that helps and do get in contact if you require further support.



Answered by

Boring Money