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Property to be used as retirement finance, study reveals
Two-thirds (73 per cent) of people would consider using housing equity as part of their later life finances, reveals The Equity Release Council (The Council). By 2017, more than a quarter of a million (257,168) retirees will consider downsizing and 59,347 will look into equity release.
Research undertaken among almost 2,000 UK consumers of all age groups highlights the fact that while some of today’s pensioners might be able to rely on income from pensions, investments and benefits, going forward more and more retirees realise the critical role their property will play in retirement.
The research – undertaken to coincide with the launch of The Council (formerly SHIP) – reveals that while expected reliance on property decreases with age as people build up other assets, over half (55 per cent) of today’s 55-64s still believe it will play some part in their retirement finances.
The most common way that people would consider accessing the value in their homes would be via downsizing (45 per cent) followed by renting out a room (10 per cent) and then equity release (7 per cent). In practical terms, this means that in 2017 over 59,000 retirees will be looking at what role equity release can plan in their retirement financing.
Those who have a second property such as a buy-to-let investment or holiday home might consider renting out the property for income (17 per cent) or selling the property (7 per cent) if they needed to improve their retirement finances.
When asked to list what they thought would be the top sources of income in retirement, an employer pension (44 per cent), private pension (39 per cent) and savings/investments (36 per cent) came out on top. However – overall - 61 per cent said property would be one of the top sources of finance in retirement.
When these figures are considered against population projections, it suggests that by 2017 more than a quarter of a million (257,168) people will consider downsizing and 59,347 will look into equity release. This is a conservative estimate as 27 per cent of people between the ages of 18 and 65 say they feel benefits will be one of their top three sources of income in retirement - something that is unlikely with the current Government stance.
Andrea Rozario, Director General of The Equity Release Council says: “This research clearly shows that more and more people are considering using their property as part of their retirement finances. This might mean choosing to downsize, rent a room out or use equity release – or any combination of the above.
“With such a heavy potential reliance on the equity tied up in UK residential property, it is vital that consumers receive accurate information and access to specialist advice and products which have excellent safeguards. Therefore we are delighted to launch The Equity Release Council which for the first time will look to bring together all aspects of this industry to promote the highest standards of consumer protection and education.”