I certainly would not recommend you restrict yourself to looking only at an annuity (although checking what is available from the whole of the market, including impaired life and enhanced annuities, should be a key part of your pre-retirement research, as well as looking at the unsecured pension options with a spread of appropriately risk-rated investments).
However, you are not allowed to convert your pension into residential property. Certain forms of residential property are allowed within your pension and this includes student accommodation, as long as you own it via a fund where you do not own more than 10% of the property.
There are some pension-appropriate funds that would offer you access to this market, but care should be taken if considering a non- regulated fund.
If you are buying property outside the fund with your pension commencement lump sum, you need to consider the income you would receive after costs and tax, as well as how you would fund the property if there was a void in the tenancy.
As far as your lump sum goes, I would recommend you look at the alternative options, such as funding your Isa or a bond, to build as much tax efficiency into whatever method you use to boost your income.
Rental income would be taxed at your highest rate.