If you’re in your 50s, 60s or beyond you may have money tied up in a pension already, but other assets, such as buy to let property, can have a role to play in providing a retirement income. 

Bricks and mortar often appeal as a tangible asset, but like any investment, the property market has its ups and downs, and comes with particular risks and challenges that it’s important to consider. Bear in mind, too, that while the value of your pension depends on investment performance, any charges, and how much you pay in, your contributions benefit from valuable tax tax relief. Pensions are also more flexible than ever, as you can usually do as you wish with your defined contribution pension savings from age 55.

Here, we run through the pros and cons of investing in property and pensions, so you can decide on the best option for you, or whether a mix and max approach could be right for you.

Income and growth from property and pensions


A housing shortage and rock-bottom interest rates have helped to drive enormous capital returns from bricks and mortar in the last 10 years. According to the Office for National Statistics (ONS), the average house price rose from £172,655 in June 2013 to £287,546 in June 2023.

On top of your capital gains, the average rental yield in the UK is 3.63%, according to SevenCapital, and anything over this is considered a high yield. For example, if you bought a property for £300,000 and were able to get £1,300 in rent each month, your rental yield would be 5.2%.

But is investing in property still likely to produce generous returns? The future is less unclear for house prices, with interest rates on the rise and a recession placing pressure on the market. Like any investment, returns aren’t guaranteed, and you need to consider the costs involved in buy to let that may take a chunk out of your profits (more on this below). 

Bear in mind, too, that the income you actually receive from a buy to let property will depend on a wide range of factors such as where you buy, vacant periods, and tax obligations. Read more in our guide Is buy to let a good investment?

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If you’d like to discuss your options with a buy-to-let expert, you can get advice from a Rest Less Mortgages advisor today.

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The majority of pension savers belong to defined contribution pension schemes, where the amount you end up with at retirement depends on how much you’ve paid in, alongside investment performance, and any charges you’ve paid. Learn more about defined contribution pensions in our guide What is a defined contribution pension?

If you belong to a company scheme, your returns in a workplace pension are boosted by employer contributions. Your employer must contribute at least 3% of qualifying earnings to your pension each year, and this money can make a big difference to your pension’s value over time.

Whether you have a workplace or a private defined contribution pension, your pension scheme provider will usually invest the money you place with them in a wide range of different assets, such as stocks and shares, bonds, property and cash. The UK stock market has suffered significant downturns in recent decades, but in the last ten years it has grown by around 32%. However, markets have seen big falls during this period, and no-one can be certain of future returns. The hope is that despite periods of volatility, those who remain invested over the long term will see their investments recover and grow over time, although there are no guarantees. Find out more about coping with market volatility in our guide 9 tips for maximising your pension savings in difficult times.

Meanwhile, your pension contributions also benefit from tax relief. This is particularly valuable for higher rate or additional rate taxpayers, who benefit from 40% or 45% tax relief. Read more in our article How pension tax relief works.

If you’re in a defined benefit, also known as a final salary pension scheme, your income in retirement is guaranteed to be a certain amount, no matter what happens to stock market performance. You can find more about defined benefit pensions in our article What is a defined benefit pension?

The risks


Property price growth has slowed recently, and there’s no guarantee that prices or rental yields will rise in the future, or that tax rules will remain the same. Significant changes could make a big dent in your retirement income if you’re relying on rent from tenants, for example, and have already impacted landlords in recent years (read more about these below). 

Making a profit through letting a property can be a challenge, given tax bills and mortgage repayments, and there’s also the risk that you could struggle to find tenants, and the property may stand empty for a period. Your property could also suffer damage and need repairs with the cost met from your own pocket if you haven’t got landlord insurance. 

Property is also an illiquid asset, meaning it can be hard to sell and convert into cash quickly when you need the money. There’s no guarantee that you’ll make a return when you come to sell either, as you may not get back what you’ve spent on the property.


As mentioned, your pension investments are usually subject to stock market volatility, unless you’ve got a defined benefit, also known as a final salary pension, which provides you with a guaranteed level of income in retirement. Your investments may fall as well as rise, and there’s a chance that you may not get back as much as you initially invested.

If you choose a flexible pension drawdown scheme to provide an income in retirement, your pension will remain invested in the stock market, so there’s still risk involved. Read more in our article What is pension drawdown and how does it work? 

However, given enough time, and provided your investments are well balanced, the hope is that your pot will rise in value by the time you reach retirement. 

If you want personal recommendations or advice about your specific circumstances, you can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.

If you’re considering getting professional financial advice, Aviva is offering Rest Less members a free initial consultation with an expert to chat about your financial situation and goals. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

Tax considerations


Changes to taxation rules have made it harder to make a profit from buy to let in recent years. Landlords used to be able to deduct mortgage interest in full from their rental income before being liable to tax. However, the amount of mortgage interest relief that can be claimed has been steadily reduced in recent years, and is now at a flat credit of 20% on mortgage interest. However, you can deduct certain costs, such as maintenance and repairs, and letting agent fees. Read more in our article Buy to let: A beginner’s guide.

You’ll pay the Stamp Duty Surcharge when you buy additional residential properties, which amounts to a hefty 3% on top of the usual stamp duty charge. 

If you sell the property and make a profit that exceeds your current annual allowance, you will have to pay capital gains tax (CGT). In the 2022/23 tax year, the CGT allowance stands at £12,300. You’ll pay capital gains tax at a rate of 18% on any profits above your allowance, rising to 28% if you’re a higher-rate taxpayer with an income above this amount.


Your pension is essentially a tax-efficient wrapper, so you don’t pay any UK income tax on dividends in your retirement pot, or capital gains tax on investment growth. 

You can also take 25% of your pension as a tax-free lump sum, or in tranches to supplement your income when you reach age 55 (rising to 57 from 2028). Any further withdrawals from your pension are subject to income tax at your marginal rate. 

However, by carefully managing your withdrawals, you can reduce the amount of tax you pay. For example, you can spread your withdrawals across a number of tax years to reduce your income tax liability. Read more in our article How much tax will I pay when I withdraw my pension? 

You can take up to 25% of your pot as a tax-free lump sum from a defined contribution from the age of 55, rising to 57 from 2028, and do as you wish with the remainder. There are several options, such as taking an income from your pension using a drawdown plan, making flexible withdrawals to suit your income needs, or buying an annuity to provide an income for life. Find out more in our article Your pension options at retirement.

Calculate your pension

Use the Rest Less pension calculator to find out how much you might need to save for retirement, how much your pension pot could potentially be worth and how long it could last.

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Costs involved


As mentioned, the cost of buying a second property to rent out, such as solicitor, survey and estate agent fees, and the additional Stamp Duty you’ll pay, can rack up. In addition, mortgage costs have increased as interest rates have soared in the last year. There are other fees to factor in too when taking out a mortgage, such as arrangement, valuation fees and solicitor costs. Find out more in our article Buy to let mortgage fees and costs explained

You’ll also pay ongoing fees to rent out your property to letting agents, if you use them, and any maintenance costs (read more about these below). Some of these costs such as management, and repairs are tax deductible, but they can still add up. 

If you’re looking for mortgage advice, you can speak to a Rest Less Mortgages advisor and get high quality advice on residential, retirement interest-only, equity release and buy-to-let mortgages.


You don’t need a hefty lump sum to start a pension, and you can save as much as you like into your retirement pot. If you’re contributing to a workplace pension scheme, a portion of your salary will be automatically invested into your pension, along with employer contributions. Find out more in our guide Saving into a pension for the first time.

You’ll pay charges for your pension, and it’s important to ensure that you’re not paying over the odds. Some pension providers charge a single overall management fee, which includes other costs. However, you may also find there are different charges on top of this, particularly with older workplace pension plans. 

The annual management fee is usually your biggest charge. There’s a cap of 0.75% on annual management charges for workplace defined contribution pensions under auto-enrolment. However, the older your pension scheme, the higher the annual management charge will be, with fees that in some cases can amount to as much as 2% of your pension’s value each year. Read more in our article What pension charges am I paying?



Unlike a pension, a buy to let property requires constant upkeep, and you may need to spend a lot of time, effort and money on your property investment. You could find yourself with unexpected bills if the roof has a leak, or the boiler has to be replaced, for example. 

It’s important to consider that maintaining a buy to let property and meeting your tax obligations will involve some time and effort, and could be stressful. Over the long term, owning a buy to let property can be a hassle, and expensive to maintain. Think of it as like running a small business. 

You’ll also need to deal with contact from letting agents, if you’re using them, and tenants, and keep up-to-date with repairs, general maintenance and insurance.


Paying into a pension usually involves far less work on your part. If you’re contributing to a workplace pension, you’ll be automatically enrolled into this by your employer, and they’ll be paying into the pot too every month. However, you may be able to choose from several different funds for your workplace pension, and it’s important to ensure your pension investments are working as hard as possible. Find out more in our article Where is my pension invested? 

If you’re paying into a personal pension or self-invested personal pension (SIPP) you may want to take time choosing your investments, and keeping an eye on their performance. Read more in What are the different types of pension?

Other ways your property could fund retirement

Owning a buy to let property isn’t the only way you can use bricks and mortar to boost your retirement. Here’s our rundown of some of the other options that might be available to you:

Equity release

You may want to consider using an equity release plan to unlock some of your property wealth, while continuing to live in your home. However, you must seek professional advice from a qualified equity release adviser who belongs to the Equity Release Council (the trade body for the equity release sector). Find out more in our article Should I take an income from my pension or property? 

Equity release enables you to take a lump sum, or draw down funds as and when you need them, for example, if you want to regularly top up your income. Interest on the amount you release rolls up over time, instead of being paid monthly like a standard mortgage. However, there are pitfalls. It’ll reduce the amount you have to pass on to your family, and interest charges build up over. Read more in our guide Equity release – what is it and how does it work?


Alternatively, selling up and moving to a cheaper property is another way to release funds to increase your overall income. If you’re moving to a smaller property, this can also reduce the cost of household bills such as gas and electricity, and council tax. 

However, there are no guarantees that you’ll release as much as you’d hoped for on sale, as the selling and buying process is expensive, and you need to factor in additional costs such as Stamp Duty which can add thousands to your costs. Find out more in our article Five questions to ask yourself if you’re considering downsizing your home.

Where to go for advice

If possible, it’s generally considered sensible to avoid relying on a single asset or investment. Solely investing in buy to let for retirement could prove to be a risky strategy. If you’re paying into a pension, you can make sure this has a wide spread of investments to reduce your risk. 

If you’re not sure which option or options could be best for you, it’s worth seeking professional financial advice. If you’re 50 or over and have a defined contribution pension, you can get free guidance on the options available to you from the Government’s Pension Wise service.

If you want personal recommendations or advice about your specific circumstances, you can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.

If you’re considering getting professional financial advice, Aviva is offering Rest Less members a free initial consultation with an expert to chat about your financial situation and goals. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

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