HomeOwners Alliance logo

Sign up to our newsletter for the latest property news, tips & money saving offers

  • Win your mortgage paid for 6 monthsstart remortgaging now

How about dipping into your pension to buy your first home?

First-time buyers should be allowed to dip into their pensions to help them get on the property ladder says Housing Minister.

Help first-time buyers

First time buyers should be allowed to dip into their pension savings to help them buy a home, said Housing Minister James Brokenshire this week.

Speaking at the Policy Exchange, he said: “We should be looking at allowing an individual to use part of their pension pot as a deposit on a first-time home purchase.

“We should be changing the necessary regulations to allow this to happen, protecting the integrity of pension investments but allowing lenders to innovate and design new products to bring this opportunity to consumers”, he added.

The change would give people “real choice, real opportunity” and could make a “huge difference to millions of lives”, he said.

The backlash

No sooner had Mr Brokenshire announced his proposals to help first time buyers, he was met with fierce criticism.

Officials at the Department for Work and Pensions have written to Downing Street to say the idea was not cleared with them and could carry risks

While Sir Steve Webb, the former pensions minister and now director of policy at Royal London, also spoke out. He warned: “We need people to save short term for a deposit, and we need them to save long-term for a pension. The amounts going into pensions for young people are pretty small already but at least they are starting young. If you empty that then they’ll end up working till they’re 75.”

Indeed, according to the Halifax the average first-time buyer is 31 and needs a deposit of around £33,000.

But the Office for National Statistics data shows the average pension pot for people aged 35 to 44 is just £35,000.

So if an individual had no – or little – savings, based on these figures the average person would need the majority of their pensions savings to raise a deposit.

The end result is you leave people with a much reduced pension pot for old age.

For answers to your questions, dedicated support and expert advice on your homeowning queries, join us as a member today!

No guarantee it will help

Not only that but as Tom Selby, senior analyst at AJ Bell, noted “There is no guarantee that such a proposal would actually help people get on the housing ladder at all,”.

“Unless the Government dramatically boosts the supply of homes in the UK then this plan risks stoking house price inflation.”

We need a different solution

The HomeOwners Alliance’s Chief Executive Paula Higgins has serious concerns about these proposals.

She says: “Our research out tomorrow will highlight the litany of problems with renting. But that doesn’t mean we should encourage people to get on the housing ladder at all costs.”

“Pension pots are there for the later stages of life and need to be preserved for that purpose. This idea attempts to solve the homeownership crisis by exacerbating a pension crisis.”

“Fundamentally, we need to build more quality homes and making sure there is help for those that need it the most,” she adds.

Use our online mortgage finder, or speak to our award winning mortgage brokers for free expert advice, to start finding the mortgage that is right for you today

Leave a comment (4)* Required

  1. Yoh RnameYoh Rname

    It is amazingly naive, not to us other words, to suggest people are better off renting at old age then living in their own house with little pension to live with. Worst case scenario they could sell the house and return to the same situation as if they never bought it.

  2. Thomas mussellThomas mussell

    I believe this is a great idea for family’s that struggle to save. Iam a family with 3 boys and rent and my monthly out goings are to much for me to save enough for deposit House. I do pay into a pension scheme and this would help me greatly if I could us this for deposit. I’m in late 30s so I’ve got loads of time before I retire to build pension pot back up. My priority is a family home for my wife and children.

  3. BenBen

    I am 30 + years old and been renting for 13 years I have a good job but unable to save for a deposit whilst paying off someone else’s mortgage. I have been paying into a pension for the past ten years and if this was available to use as a deposit I could finally got on the housing ladder. This would be a no brainier for me I could finally start working towards building a property portfolio and this would far outweigh the measly growth Royal London forecast on there medium growth outlook let alone if we realised the low growth were I lose money and end up a poor old man anyway.

  4. WendyWendy

    The way the country is , the state it’s in , why not dip into the pension as at presently the way things are we ll all be working till we are 100 nevermind 75
    It’s all crazy , well the pensions department are going to moan , they just want our money for aslong as possible , I think it’s a great idea dipping into pensions early and let’s be honest people are living longer but a lot are also dying much younger
    As usual government are trying to stop a GREAT which I think is a great
    Other option is – BRING BACK 100% MORTGAGES I know 1000’s paying higher rents than what a mortgage would cost – SORT IT OUT

Looking for fee free mortgage advice?

We’ve teamed up with the UK’s leading fee-free mortgage broker to provide you with expert advice.L&C Logo✓ UK’s leading fee free mortgage broker

✓ Compare 1000s of mortgages

✓ Fully qualified advisers

Find out more >
close popup ×

Before   you go...

If you found this website useful, could you spare a minute to leave us a review?