Penny Daniels, a 33-year-old first-time buyer, is among many individuals who are placing home ownership as a higher priority than saving for retirement. Having lived in both Cumbria and Central America during her upbringing, she recently took a significant step by purchasing a two-bedroom shared ownership apartment in west London.
Ms. Daniels, which is a pseudonym, opted to buy a 35 percent share of her new property, exceeding the typical 25 percent share that many first-time buyers secure. This decision came with a substantial deposit of nearly £50,000, a feat she could not have achieved without making sacrifices to her pension savings.
In an interview with The i Paper, she remarked, “Initially, I was somewhat skeptical and confused about how shared ownership worked—the idea of owning just part of a home and understanding who holds the remaining percentage.” However, after conducting some research on the Share to Buy website and receiving advice from friends familiar with the scheme, she found the concept to be quite straightforward. “Once you grasp the numbers, it becomes more about determining what kind of property I can realistically afford,” she added.
Ms. Daniels was able to put down a deposit of £46,000, sourced from a combination of inheritance money, £10,000 she had personally saved, and assistance from her two brothers. However, aside from the minimum contribution to her pension as part of her employment package, she currently lacks any private savings dedicated to retirement.
“Do I prioritize saving for a deposit over retirement saving? Absolutely, 100 percent,” she stated. “Owning property is a tangible investment for the present, whereas contributions to a pension are investments that won’t yield returns until retirement. Property ownership offers immediate benefits, with potential for growth as the property value increases and as I enhance my share.”
Understanding Shared Ownership
Shared ownership is a government-backed scheme that enables buyers to acquire a partial share in a property while paying reduced rent to a housing association for the remaining share. Essentially, buyers are only securing a portion of the property, meaning they require a shared ownership mortgage only for the share they own. This arrangement allows for a smaller loan and a lower deposit requirement compared to purchasing a property outright.
When engaging in a shared ownership purchase, the minimum initial share a buyer can acquire is 10 percent of the property’s total value. Buyers also have the option to increase their ownership share at a later date if they choose.
- According to Share to Buy, a staggering 88 percent of potential buyers are currently prioritizing saving for a property deposit over pension contributions, which has led to increasing financial insecurity in retirement.
- The survey, which included responses from over 2,200 individuals, indicated that the trend of deprioritizing pensions is not limited to younger generations but is impacting buyers of all ages.
- Those aged 36 to 45 made up the largest demographic admitting to favoring deposit savings over retirement planning (27 percent), followed by the 46 to 54 age group (23 percent).
“Retirement is simply not on my radar right now,” Ms. Daniels acknowledged, emphasizing that it holds little importance for her at this stage in life. She contributes the minimum required amount to her company pension, which in the UK is currently set at 8 percent. This figure typically comprises 5 percent from her salary (4 percent from her and 1 percent from the government in tax relief) and an additional 3 percent from her employer. Occasionally, employees can opt to contribute less each month if their employer compensates more.
Ms. Daniels also noted, “Many of my friends and colleagues share my mindset. It feels like people are focusing on living in the present while investing in long-term assets that aren’t tied to a specific timeline or age. The rising pension age further discourages many from prioritizing retirement savings.”
Jade Turnstill, head of brand and content at Share to Buy, expressed concern, stating, “It’s alarming that potential first-time buyers feel they must prioritize saving for a deposit at the expense of their future financial security. With soaring property prices and interest rates, many buyers face a daunting challenge just to save for a deposit, let alone consider their long-term financial well-being.”
For a significant number of individuals in the UK, homeownership remains an elusive dream, with average property prices currently around £367,994, according to Rightmove’s latest House Price Index. Ms. Daniels commented, “I completely understand why many people feel this way. Traditionally, there has been an expected sequence—meet someone, marry, and purchase a house together. However, I chose to buy independently. Being single and self-sufficient is now much more accepted and even celebrated.”
She concluded, “Rental prices are exorbitant, and for what you pay in rent, you might as well add £500 and be covering a mortgage. I ensured I was financially stable before making this decision, which I realize isn’t a luxury everyone has. But if you can, then I wholeheartedly encourage you to pursue it.”
