Over 55s in England, Scotland and Wales are sitting on more than £300bn in property wealth, according to Retirement Advantage, which could be accessed via equity release to provide funds in retirement.
Based on calculations using the firm’s loan-to-values on equity release products, the collective property wealth of over 55s in England, Scotland and Wales could yield as much as £335bn via equity release.
Regionally, the south east tops the list with £69bn of equity release wealth owned by over 55s, followed by greater London at £59bn.
Alice Watson, product and communications manager at Retirement Advantage Equity Release, commented that while equity release take-up is growing rapidly, the total lent in all of 2014 was only £1.4bn, “so it’s clear that is merely the tip of the iceberg”.
In June, Key Retirement’s pensioner property index showed that retired homeowners have seen their property wealth grow by more than £12.5bn in the past three months as house prices continue to climb, with those aged over-65 now owning a new record high of £873.8bn outright.
Meanwhile, Retirement Advantage’s equity release property value tracker tool also found that regions outside London are finally seeing faster rates of growth than the capital itself, with potential wealth accessible via equity release totalling £20bn in Yorkshire and Humberside and £35bn in the south west.
Ms Watson explained that until recently equity release was largely been viewed as a London and south east-focused success story, due to higher than average property prices creating a large group of asset rich but cash poor retirees.
“But with house prices picking up growth across the UK and starting to outstrip London, it hints at significant opportunities for over 55s right across the country to look for new ways to access their wealth in retirement.”
Earlier this month, FTAdviser revealed that the inheritance tax changes announced in the Summer Budget may be a blow on the equity release market.
In the Summer Budget, the chancellor confirmed the effective inheritance tax threshold at £1m, meaning the family home will be taken out of inheritance tax for all but the wealthiest. The government is also set to introduce an additional nil-rate band when a residence is passed on death to direct descendants.
peter.walker@ft.com
