A major survey of 1,500 adults shows that a quarter plan to downsize their home in retirement, with many others suggesting that buy to let would help pay for later life.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, warns that landlords and owner occupiers alike should not be seduced by rising property prices.

“It’s more complicated than first thought and people should think carefully before putting all their eggs in one basket and deciding to fund their retirement through property rather than a pension” cautions Morrissey.

“Those looking to fund retirement through buy-to-let … need to take account of other costs before taking the plunge. 

“You will pay higher rates of stamp duty on a second property and you will need to factor ongoing costs such as maintenance fees and covering the rent during periods when it is unoccupied. 

“If you are thinking of selling the property, then you will need to factor in capital gains tax as well. This currently sits at 18 per cent if you are a basic rate taxpayer and 28 per cent if you pay higher rate tax on gains above £12,300. 

“The recent Autumn Budget slashed this threshold down to £6,000 from next April and £3,000 the following year so you could be landed with some nasty tax bills.”

Morrissey adds that those wanting to downsize to fund retirement may have trouble selling in the current housing market 

She adds: “According to our data 16 per cent of people said they wouldn’t make enough from downsizing to make it worthwhile, and we could see this figure rise in the coming year. 

“The costs associated with moving is another key factor with more than a fifth of people saying a move would be too expensive while more than a third admitted they were too attached to their home to consider a move – the desire to downsize wanes as people get older so it’s important not to rely on having to do this to fund retirement.”