Pensions vs Property for Expats: Why the Smart Money Says 'Both'

There’s something oddly enduring about the debate between property and pensions, as if, decades later, we’re all still trying to pick a team. 

For many UK expats, especially those living in places like Thailand or southern Europe, the pull of “bricks and mortar” feels natural. It’s tangible, it’s lifestyle-driven, and it can even double as a retirement home. 

But the world, and the maths, has moved on. In reality, the best answer for many expats today isn’t one or the other. It’s both.

A Look at the Numbers: How Returns Stack Up

Recent research by Netwealth, featured in MoneyWeek, put some hard figures to this long-running debate.

They looked at how a £50,000 pension pot and a £50,000 property investment might perform over 20 years, factoring in everything from tax relief to purchase fees, letting costs and capital growth assumptions.

Their conclusion? The pension pot grew to approximately £147,000, while the property investment came in at £83,000, a 77% performance advantage for pensions. 

Why? 

Because pension contributions attract tax relief (up to 45% for higher earners), benefit from compounding, and typically involve fewer hidden costs than a buy-to-let setup with maintenance, agent fees, mortgage interest, and tax to consider.

If you’re non-resident with no UK-taxed earnings, you can usually still contribute up to £3,600 gross per year for five tax years after leaving the UK, and receive basic-rate relief. If you still have relevant UK earnings, the usual annual allowance rules may apply, including higher contribution limits and full-rate tax relief.

Of course, those returns depend on market performance, but so does property. If property prices stagnate or your rental flat sits empty for three months in the quiet season, the supposed reliability of rental income starts to look less secure.

Property: Still Powerful, But No Longer a Silver Bullet

None of this means property is off the table. Far from it. 

But its role in a retirement plan needs to be viewed more strategically than ever, particularly for expats.

In Thailand, for example, foreigners can own condominiums outright (within the 49% quota), but landed property requires either a leasehold structure or a Thai company, both of which introduce complexity and long-term considerations. 

While some clients buy condos in Bangkok or coastal areas as part of a rental strategy, others simply want lifestyle access: a future retirement base, a winter escape, or a foothold for long-term residency planning.

In 2025, expat mortgage rates in Thailand commonly range from 6% to 8%, depending on lender and loan structure. It’s well publicised that if you’re considering leverage, be sure to stress-test your cashflows not just for interest rates +1–2%, but also for 2–3 months of potential vacancy. Property investments can be rewarding, but they’re not always passive.

The key question becomes: Is your property purchase truly an investment, or a lifestyle asset with side benefits?

It’s also worth noting that property, unlike pensions, tends to tie up capital and can take time to sell. That’s not necessarily a drawback, but it does mean you’ll need liquidity elsewhere, especially if unexpected expenses crop up or you want to keep your options open across countries or currencies.

Pensions: Flexibility, Tax Relief, and Long-Term Firepower

One of the most underappreciated advantages of pensions is their ability to adapt to your retirement timeline, location and tax residency.

Thanks to UK tax relief, your pension contributions receive an instant boost. For higher earners, this can mean 40-45% of additional value from day one.

Allowances at a Glance (2025/26)

• Annual Allowance (AA): £60,000
• Money Purchase Annual Allowance (MPAA): £10,000 (applies if you’ve accessed your pension flexibly)
• Tapered Annual Allowance: Reduces to £10,000 for those with adjusted income over £260,000

In 2024, the lifetime allowance (LTA) was abolished, removing the punitive tax penalties that previously limited how large your pension could grow. While the tax-free lump sum is now capped at £268,275 (unless you hold transitional protection), higher earners now have more freedom to build meaningful pots.

Important: From 6 April 2027 (subject to legislation), unused defined contribution (DC) pension funds and death-benefit lump sums will be brought into your estate for inheritance tax. Pensions still offer planning advantages, such as deferral, nominee flexibility, and drawdown control, but the IHT benefits are narrowing. Structure and timing will matter more.

For expats, SIPPs and international pension schemes (like QROPS, in some cases) allow for global investing, income drawdown in different currencies, and estate planning flexibility. And perhaps most importantly: pensions can be hands-off, low-effort investments. You’re not managing tenants or chasing repairs, just reviewing strategy and adjusting as life changes.

Expats: Why You Don’t Have to Choose

Here’s the truth: very few of the expats I speak with are choosing between pensions or property. The smarter question isn’t which, but how much of each, and when.

Let’s say you’ve got £100,000 earmarked for retirement planning. Does it all need to go into property? Possibly not, especially if your goal is a flexible, globally mobile retirement. On the other hand, should you max out pension contributions and ignore the potential of Thai real estate when you’re planning to live here long-term? Probably not either.

Property offers lifestyle access, inflation protection, and potential legacy value.
Pensions offer liquidity, tax relief, and more seamless cross-border planning.

As a globally mobile professional, especially one nearing or planning for retirement abroad, blending both gives you flexibility, control, and better tax optimisation.

You might fund your Thai condo from cash or a modest drawdown, while still building pension value for long-term income. You might rent abroad but use pension income for flexibility and invest your spare capital elsewhere. There’s no one-size-fits-all solution, and that’s the point.

Practical Advice for Structuring a Balanced Plan

Here’s how I encourage clients to think about it:

• Start with your lifestyle goals, not the investments. Are you planning to retire in Thailand full time, split time between the UK and abroad, or stay flexible? That determines whether property is a base, a backup, or a bonus.
• Use pension allowances while you still can. UK tax relief, especially at higher rates, is one of the few “free lunches” left in finance. Even if you plan to retire abroad, the value of growing your pension while it’s tax-efficient is immense.
• Don’t overcommit to illiquid assets. A property can be hard to sell quickly or cost more to maintain than expected. That doesn’t mean don’t buy, just don’t buy so much that your options become limited.
• Plan for currency and tax exposure. Pension income in GBP might be worth less if the pound weakens. Rental income in THB might have tax implications depending on your residency. Blending the two gives you room to manage FX risk more dynamically.
• Think long-term, including legacy. With pensions becoming part of your estate from 2027, early structuring becomes even more important. Property requires probate and local legal advice. Make sure your succession plan spans both.

Why This Isn’t a Binary Decision

The debate between property and pensions will likely never go away, it’s too emotional, too tied to culture and past financial habits. But in 2025, the landscape has changed. Pensions offer more flexibility, property carries more complexity, and expats have more moving parts to consider than ever.

You don’t have to choose one over the other. In fact, choosing both, intentionally, strategically, and with the right advice, may give you a better outcome than either could alone.

The good news? With the right planning, you can have income, a home base, and a strong financial future,  all working in tandem.