Twitter Facebook RSS FEEDS

Equity release set to grow as pensions weaken

Monday, 3 December 2007 12:00 AM

Weakening pension provision is set to force retirees to turn to their property to fund their old age.

The over 60's will own £2.21 trillion of equity in their homes by 2036 at today's prices, according to new research published by equity release organisation Sovereign Reversions.

This marks an increase of 61 per cent on the current level of £1.37 trillion.

By 2036 there will be 20.8 million over 60's in the UK, equating to almost a third of the whole population, (29 per cent). At present the figure is only 21 per cent.

The elderly are set to turn to equity in their homes as pension provision becomes increasingly insufficient.

Between 2024 and 2046, the normal state retirement age will increase from 65 to 68, meaning people will be forced to work longer.

Coupled to this final salary schemes are being consigned to history, making pensions more dependent on uncertain investment outcome. Age dependency ratios are also increasing, making it harder for working families to support more ageing relatives.

These factors are set to combine to force pensioners to look to the equity in their property for support.

"Equity release is riding the demographic mega-trend of the ageing population. The UK's savings and assets are increasingly concentrating in the hands of the older generation," said Graeme Marshall, chief executive of Sovereign Reversions.

"Older people typically own more valuable homes than the average and the vast majority have no mortgage debt left. For many, the value of their home will become an obvious source of income to help fund their retirement as traditional means of income and support are eroded."

Up to 80 per cent of the over 60s are homeowners, ahead of the 70 per cent average for the population as a whole.

After deducting any remaining mortgage debt on their property the average equity for a homeowner over the age of 60 currently stands at almost £265,000, meaning the over sixties own almost half the UK's £3.3trillion of housing equity at present.

Related stories

Hereford Cathedral

Downsizing to release equity not always practical

Gains from downsizing do not stack up for over-55s in one in three areas, says study by equity release group SHIP.

 The average amount of equity released by home owners was little changed at £49,703 but the figure was 6 per cent up on this time last year.

Equity release market grows by 10 per cent

Providers lend more than £200 million in third quarter as home owners look to release cash tied up in their property.
Downsizing, moving to a cheaper area and equity release seen as main ways to use home to supplement retirement income. Image: Thinkstock

Over-50s look to homes to boost their pensions

Downsizing, moving to a cheaper area and equity release seen as main ways to use home to supplement retirement income.

Equity release is getting more popular, claims expert.

Cash-poor Brits 'boosting equity release uptake'

Cash-poor Brits are contributing to the growing popularity of equity release in the country, it has been claimed.
Downsizing may be more sensible

Is equity release always the best option?

People in need of home repairs should explore options other than equity release to fund them, according to Sixty Plus.

 Row of terraced houses in London

Homeowners sitting on valuable equity

Borrowers hold unmortgaged housing wealth worth around £800 billion as most homeowners’ houses are worth more than their mortgages.
Wasteland near Basingstoke

HCA to release land for 3,000 new homes

The Homes and Communities Agency is to release land later onto the open market to allow development of around 3,000 homes.

 Champagne tower

Equity flow drives housing market, claims expert

Price growth will only really occur where equity flow exists, a housing research expert has argued.
Is equity release such a financial monster?

Equity release: The last resort?

Equity release: The last resort?

Property not made of gold bricks for retirement

Equity release 'must be last resort'

Equity release 'must be last resort'

Search property

Headlines

Directory

Alaris

Alaris Logo
Alaris specialise in quality Bathrooms and Kitchens along with many other unique products for your home. The range of kitchens, kitchen worktops and bathrooms is extensive and the highest quality so you are sure to find what you want. New bathroom furniture, bathroom suites, taps, showers and cabinets are added regularly.

Bathrooms365

Bathrooms365 Logo
Bathroom365 supply all areas of your new bathroom - leading-edge designed bathroom suites, stylish bathroom taps and showers, all styles and forms of shower enclosures and a vast collection of bathroom furniture.

Beds Direct

Beds Direct Logo
Whether you've just moved into a property and need to furnish it or just fancy having something new to sleep on, Beds Direct offer you a wide array of beds to order online or via the telephone.

Fitmykitchen

Fitmykitchen Logo
Fitmykitchen are specialist suppliers of kitchen appliances, sink taps, waste bins and furniture. So whatever you want from kitchen sink taps to waste bins look no further than fitmykitchen, UK, the specialist suppliers of kitchen appliances, stainless steel sink taps, waste bins and kitchen furniture.

MyStampDuty

MyStampDuty Logo
We help people buying property all over the UK to minimise Stamp Duty Land Tax on residential and commercial property. If you are looking at purchasing a new home or business premises over £500,000, contact us today by completing the form on the right

Oak Furniture Land

Oak Furniture Land Logo
For hardwood furniture, including Solid Oak, Mango, Mahogany, Sheesham, Acacia, Ash and Birch, look no further than Oak Furniture Land.

Propertywide

Propertywide Logo
Propertywide.co.uk is Countrywide plc's dedicated property website. Created to provide online access to all our estate agency, lettings and property related services, Propertywide.co.uk has been designed with the consumer at heart.

The 21st Century Radiator Company

The 21st Century Radiator Company Logo
Welcome to 21st Century Radiator Company. We supply a stunning range of traditional reproduction high quality cast-iron radiators and cast-iron baths. All our cast-iron radiators and cast-iron baths are brand new, fully tested and guaranteed for ten years.

Rated People

Rated People Logo
Whatever type of home improvement or garden remodelling project you have, Rated People can help you to identify the right tradesmen for the job in a way that is quick, easy, convenient and, as it is based on real-life recommendations, trustworthy.

Residential Land

Residential Land Logo
If you are looking for short or long term rentals in Central London, Residential Land have a portfolio of over 1200 flats and houses in the best postcodes across the Capital.

Simply Bedrooms

Simply Bedrooms Logo
Simply Bedrooms, a part of Sleepwell Bedrooms Ltd, supplying quality beds, wardrobes, sliding door wardrobes and bedroom furniture at low prices and great service, London and Home Counties Specialists.

Door Handles UK

Door Handles UK Logo
Door Handles UK is the UK's largest online range of Door Handle accessories, Door Hinges, Locks and Latches and so much more and all at genuine internet prices. We have a wide range of Chrome, Brass and Glass Crystal Mortice door knobs in both traditional and contemporary designs, whatever your taste and budget you will find a design to suit.

Woodlands Furniture

Woodlands Furniture Logo
We are an established family business situated in rural Herefordshire specialising in beautiful handcrafted classic reproduction furniture. Our comprehensive ranges are readily available from stock.

Join our directory aboutproperty.co.uk

Twitter

Join the conversation at #aboutproperty

Directory articles

Why increasing amounts of people are opting for house shares

London is an expensive place to live, however, house shares offer you the opportunity to enjoy the hustle and bustle of the capital for a fraction of the price you would pay to live on your own, making them a cost-effective way forward.

Why sliding door wardrobes are the best choice for small spaces

When bedroom space is at a premium, you need to be creative with the furniture you invest in. In terms of the wardrobe, you may want to consider those with sliding doors, as they are the most practical in small bedrooms thanks to the doors.

The durability of mahogany furniture is ideal for the office

For office-based businesses it is vital to invest in high-quality furniture that is both practical and comfortable to use. While there are many products to choose from, the benefits on hand with items made from mahogany mean it is an option you should be certain to consider.