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Brits in their 60s own a quarter of all UK property wealth

Press release: 16/09/2014

  1. People in their 60s own a quarter of all property wealth in the UK equating to £993 billion
  2. Half (52%) of those in their 60s are now considering accessing cash from their property to help fund their retirement
  3. Close to 200,000 of those aged 55 and over have released cash from their property or downsized in the past 12 months as part of their retirement plans

More and more (1) Brits approaching retirement are planning to use bricks and mortar to help fund their retirement.

According to LV=’s annual HIPpies “home is pension” report, which looks at retirees using their property to pay for retirement, Brits in their sixties own a quarter of Britain’s £4.01trillion (2) property wealth, totalling £993 billion. The report found that the value of the average property owned by sixty-somethings is £272,000 - £6,000 higher than the national average. Three quarters (75%) of people within this age group are mortgage free, and one in 12 (8%) own a second home.

The rise in people using their property to fund their retirement is likely to have been driven by increasing house values over a long period, combined with the low interest rates available on savings that has reduced retirement income. Indeed, with just one in sixteen (6%) homeowners over 50 stating that the value of their home has decreased in recent years, it is perhaps no surprise that half (52%) of those in their sixties and nearly two thirds (63%) of those in their late fifties (3) are considering accessing money from their property to help fund their lifestyle in retirement.

For some near retirees unlocking the capital in their home is driven by a need to cover day-to-day essential costs in retirement. According to retirement specialist LV=, a fifth (19%) of homeowners in their late fifties (4) plan to use the equity in their main residence because they have not saved enough into their pension.

In the past 12 months alone, 114,000 (5) of those aged 55 and over have taken out equity release (6), with a further 76,000 (7) having freed up cash in their property by downsizing. As well as allowing retirees to pay for once in a lifetime holidays and luxury purchases, some access the capital locked up in their home to pay off their mortgage and existing debts. Of those who have released equity from their home, four in 10 (38%) said that the cash will be used to supplement their retirement income and 4% will use the money to cover their own care costs.

Industry figures show that demand for equity release has risen by 35% this year and the pensions changes set to be introduced next year are likely to increase the number of people who become ‘HIPpies’ when they stop working. From next April, retirees can choose to take their pension savings as a lump sum, but as the average pension pot is less than £30,000 (8) this money is unlikely to go far. As one of the largest assets many have when they reach retirement, property and the capital tied up in it looks set to play a larger role in retirement funding for retirees.

Richard Rowney, Managing Director of Life & Pensions at LV= said: “Small pension pots, a lack of retirement savings, and the continuous rise in house prices are undoubtedly factors that have led to a rise in the number of people using their home to boost their retirement income. Indeed, if someone has lived in their property for a long time the capital they can access from it will often outweigh the pensions savings they have. With people spending longer in retirement one of the challenges that many will need to overcome is how to fund it and how to meet the financial demands they may face in later life, including long-term care and the money tied up in their home may present them with a solution.

“There are numerous ways that retirees can access the capital tied up in their home including deciding to downsize or take out equity release. For those considering unlocking the money in their home it is important to seek professional advice and explore all of the options available to them.”

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Notes to editors:

The research was carried out by Opinium Research from 28 August to 1 September 2014. The online survey was carried out on a sample of 1,012 UK homeowners aged 50-64 in employment and 65+ (retired).

In addition, estimates for current total net housing wealth owned by private households in Great Britain, by age of head of household were calculated by Nelson Research in August 2014. These are based upon latest available data on the distribution of property wealth by age of Head of Household from the Wealth and Assets Survey 2010-2012, updated to mid-2014 estimates using trends in GB residential property prices derived from the ONS House Price Index (June 2011 to August 2014 data) and redistributed in line with trends in the age distribution of the GB population aged 16+ between 2011 and 2014, derived from Government Actuary’s Department (2012-based forecasts - latest release as of mid-2014). For full definitions of net property wealth and Head of Household, see Wealth and Assets Survey 2012.

  • According to Opinium, in 2013 44% of those homeowners aged 50+ are planning or considering using money locked in property to fund their retirement through either downsizing, equity release, moving to a less expensive area, selling a second home, renting out their property or a second home – this has increased to 60% in 2014.
  • According to Nelson Research, the value of property owned by 60-69 year-olds is £993,232 million. The value of property owned by GB adults of all ages is 4.01 trillion. This is based upon latest available data on the distribution of property wealth by age of Head of Household from the Wealth and Assets Survey 2010-2012, updated to mid-2014 estimates using trends in GB residential property prices derived from the ONS House Price Index (June 2011 to August 2014 data) and redistributed in line with trends in the age distribution of the GB population aged 16+ between 2011 and 2014, derived from Government Actuary’s Department (2012-based forecasts - latest release as of mid-2014). For full definitions of net property wealth and Head of Household, see Wealth and Assets Survey 2012.
  • According to Opinium, 63% of those aged 55-59 and 52% of those aged 60-64 would consider accessing money in their property to fund their later life
  • Those aged 55-59.
  • According to ONS, there are 3,805,500 55-59 year olds in the UK and of these 3% have released equity in their home in the past 12 months equating to 114,165 people.
  • Through equity release.
  • According to ONS, there are 3,805,500 55-59 year olds in the UK and of these 2% have downsized their home in the past 12 months equating to 76,110.
  • According to ABI data, the average (mean) annuity in 2013 was bought with a pension fund of around £35,600; but the median was around £20,000.