"The UK’s retirement landscape is changing fast. Many people have more property wealth than housing wealth and property will form an increasingly important asset to fund longer lives in retirement. Yet, too few people know it’s an option or feel confident exploring it"
- Jim Boyd - Equity Release Council
Accessing housing wealth could give millions of older homeowners across the UK a longer, more comfortable retirement, according to a report from Fairer Finance commissioned by the Equity Release Council. The research finds that more than half of households aged 60+ could supplement their income by releasing equity from their homes, potentially unlocking £23bn annually by 2040 and helping to address regional disparities in retirement finances.
The report highlights that pensioners in regions such as the North East have the lowest average annual pension income at £16,380, some £15,320 below the recommended £31,700 moderate retirement standard set by Pensions UK. Homeowners could bridge this gap by releasing a portion of their property wealth. For example, a typical house in the North East valued at £261,692 could fund six years of moderate retirement income if 40% equity were released, or 3.3 fully funded additional years.
Similarly, in the West Midlands, where single pensioners earn £16,440 annually, releasing 40% equity from the median property would provide £98,800, enough to top up retirement income for 6.3 years or fully fund 3.1 additional years. In London, where property values are higher, homeowners could release £224,400 from a property worth £561,000, supporting a moderate standard of living for 15.4 years or fully funding seven extra years of retirement.
The report, How can housing wealth bridge the later life funding gap, outlines five reforms to unlock housing wealth more effectively:
Increase the supply of suitable retirement properties in communities where older people wish to live, alongside improved consumer protection and innovative tenure models.
Reduce the financial cost of downsizing, such as lowering stamp duty, to encourage freeing up family homes and stimulate supply.
Normalise the use of housing wealth in later-life advice, ensuring tools such as MoneyHelper and Pension Wise incorporate property wealth guidance.
Develop personalised services that integrate pensions and housing wealth, providing homeowners with a clear view of their financial options.
Reform regulations around later-life advice to break down silos and support consumers in using all their assets effectively.
“The UK’s retirement landscape is changing fast. Many people have more property wealth than housing wealth and property will form an increasingly important asset to fund longer lives in retirement. Yet, too few people know it’s an option or feel confident exploring it," explained Jim Boyd, CEO of the Equity Release Council.
He added, “Our findings shine a light on the potential for housing wealth to provide better retirements for people across the UK, especially in regions like Yorkshire and the Humber and the North West, where pension incomes are lower but property wealth remains strong. Millions of older homeowners are asset-rich but income-poor, and are often unaware that their home could be the key to a more secure retirement.
“The estimate that people may unlock £23bn a year by 2040 highlights how transformative the use of property wealth could be for our rapidly ageing population and for the wider economy by increasing older people’s spending power. We now need to break down the barriers to using housing wealth confidently and safely, from outdated perceptions to fragmented advice.
Boyd concluded, “This isn’t about pushing people in one direction. It’s about giving everyone access to trusted guidance and flexible options, so they can make informed choices that work for their circumstances, wherever they live.”
James Daley, managing director of Fairer Finance, added: “The relaunch of the Pensions Commission shows that this Government understands the severity of the impending later life crisis. While the Commission will hopefully unlock new ways to get people saving more for retirement, its actions will come too late for those who are already approaching later life without adequate provision.
“For many in this generation, using their housing wealth will be a vital lifeline to support a decent standard of living in later life. But there’s still work to be done to ensure people can access their housing wealth. It’s crucial that the Government does not lose sight of the problem facing the next generation of retirees, while it looks for a solution for future generations. Our report makes a range of pragmatic policy suggestions to ensure more people can use their housing wealth in retirement, and we urge Ministers to act on these as soon as possible.”
