Equity Release  

Retired earn £127bn a year from their houses

Retired earn £127bn a year from their houses

Total mortgage-free property wealth owned by those aged 65 plus is now worth £1.054 trillion, according to Key Retirement’s Pensioner Property index.

The index, which tracks the amount of equity held in property by people aged 65-years-old plus in Great Britain, found that retired homeowners earnt more than £2,400 a month from their property last year and more than £127bn has been added to the property wealth of over-65 homeowners.

This is despite the recent downturn in the housing markets with property prices across all the regions monitored by Key having fallen in the past three months.

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East Anglia saw the biggest growth in the past year, and retired homeowners in the region are now £56,138 better off - the equivalent of nearly £4,700 a month.

The long-term performance of property is underlined by Key’s index.

Since the group started analysing over 65s housing wealth in 2010 retired homeowners have seen growth of 35 per cent, or £274bn.

Owning a home has been worth around £62,000 over the past seven-and-a-half years.

Only over 65s in London and Scotland saw the value of their total property wealth drop in the past year.

However, retired London homeowners still own £172.65bn of property wealth.

Retired homeowners in East Anglia saw the biggest growth in the past year, and are now £56,138 better off - the equivalent of nearly £4,700 a month.

Over 65s in the south east and south west saw gains of more than £40,000 each, while retired homeowners in the west Midlands made nearly £40,000.

 The long-term financial benefits of owning a house is underlined by average equity release payouts of £73,610, and as much as £117,000 in London.

Dean Mirfin, technical director at Key Retirement, said: “Owning a house has been a major investment success for retired homeowners and the average gain of £29,000 demonstrates the contribution property wealth can make to retirement planning.

“Pensioners who have paid off mortgages have been able to rely on consistent tax-free returns from their homes, no matter what the impact of historically low interest rates and market uncertainty has been.

 “Whatever happens in the property market homeowners will always have a major asset that can make a major contribution to their retirement standard of living whether it is generating extra income or capital to help loved ones.”

Patrick Connolly, communications manager of Chase de Vere, said: "Many older people have benefited hugely from house price rises over the years.

"This will help them to be more financially secure in their later years, although they may also need advice on releasing capital or generating income from their property or on the best way to pass assets to younger generations."

stephanie.hawthorne@ft.com