7% of non-retired people, equating to around 2.5 million individuals, say they are planning on selling their primary residence to fund their retirement, according to the latest consumer research by Baring Asset Management.

This represents an increase of two percentage points from the research in 2013.

In total, 16% of people – nearly six million – say they are planning to rent or sell property to fund their retirement, up from 13% last year and the highest such figure since 20093.

The survey found that the economic climate continues to have an impact on people looking to use property to fund some or all of their retirement: the number saying they now plan to sell or downsize a property to fund all of their retirement has risen to 4% from 2% in 20124. While the research found that a third (33%) of people that last year said they are planning on either selling and/ or renting property to fund some or all of their retirement last year have made no changes to their plans, it also revealed that 3% (or 1.3 million people) are now planning to rent out secondary properties to fund some or all of their retirement.

Rod Aldridge, head of UK wholesale distribution at Barings, said: “It is worrying that the number of people relying exclusively on their property to fund retirement has increased again. Property can, of course, form part of a diversified investment portfolio but this year’s research indicates that more people are investing in property as a retirement source and this could mean they are too concentrated in the asset class. Property prices can be volatile so relying on your home to provide all your income to fund retirement is risky.”

The research showed that despite a rise in the number of people using property as a retirement source, the number of people saying they have ‘never planned’ to use property to fund their retirement rose significantly – from 35% in 2013 to 52%.

Regionally people living in the West Midlands are potentially the most exposed to property as an asset class, with 6% of people saying they plan to sell their primary residence to fund their retirement and 21% saying they plan to sell or rent other secondary properties. The least potentially exposed are those in Wales: 5% of people in Wales say they plan to sell their primary residence to fund their retirement and 5% to sell or rent other properties.

Aldridge added: “The level of risk involved in expecting to fund your retirement through the use of a volatile asset such as their own home or from other properties such as buy-to-let should be fully appreciated and understood. Investing for your retirement is about long-term planning and as people are living longer, more emphasis needs to be put on how a lengthier retirement will be funded. It is imperative that people diversify their investments through a range of assets which can, of course, include property.”