The Council’s latest report, Home Advantage: Intergenerational perspectives on property wealth in later life has attracted commentary from leading figures in the industry.
Claire Singleton, CEO of Legal & General Home Finance said:
“The ERC’s report demonstrates the value of homeownership and the significant positive impact it can have on your long-term financial wellbeing. However, getting onto the property ladder can be one of the more challenging financial goals that people face, particularly in a climate of double-digit house price growth. With this in mind, it’s perhaps no wonder that at Legal & General we are seeing a growing number of enquiries about how people can use their own property wealth to help loved ones secure their first home – we saw a 96% rise in the number of enquiries about gifting money to loved ones in the first five months of this year, compared to 2020.
“While gifting can be a really positive experience, for both parties, it’s important to fully consider the role property wealth will play in helping meet your own retirement needs before supporting loved ones.”
Stephen Lowe, group communications director at retirement specialist Just Group and a contributor to the report, said:
“This report highlights how powerful societal forces are shifting the landscape of retirement planning. These changes bring both threats and opportunities but there is a clear theme that equity release will have an increasingly important role to play in helping people plan for retirement and enjoy a better quality of life in their later years.
“There is currently a divide in retirement between those with generous defined benefit pension income and those without, but we are rapidly approaching a time when this is replaced by the different outcomes for those who own their own home and those that don’t.
“For the mass market of ‘Middle Britain’ consumers, buying a home and creating equity rather than renting will have a profound effect on people’s ability to meet their own retirement aspirations whether that is for higher income, to pay for home improvements or adaptations, to cover care costs, or to gift money to children in a tax-efficient way.”
Alice Watson, head of marketing, insurance at Canada Life comments on the ‘Home Advantage’ report:
“Property wealth has long been an important element of retirement planning. However, we all know that many people are finding it harder and harder to get on the property ladder, with many doing so much later than the previous generation. In fact, 54% of people who have not yet bought a home believe it is unrealistic they ever will.
“For those who do manage to become homeowners the report shows that they will enjoy a significant financial safety net compared to long-term renters. While they may be borrowing more and paying off mortgages for longer than previous generations, the boost to their financial wellbeing will be considerable.
“This normalisation of taking debt in later life means that property wealth will increasingly be used as another element of retirement income, and continue to be a way of funding the individual life ambitions and goals that we all carry.”
Will Hale, CEO at Key, said: “Today’s ‘Home Advantage’ report from the Equity Release Council not only recognises how far the industry has come over the last 30 years in terms of product safeguards and innovation but also the thousands of lives it has positively influenced – helping older homeowners enjoy more secure retirements and facilitating the opportunity for many to help their loved ones.
“The ten trends that the report explores highlight how societal change has acted as a catalyst for the evolution of this market and the significant benefit homeownership has on the financial prospects of the individual and their wider family. According to Key’s H1 2021 Market Monitor, 25% of those who released equity from their home in 2021 did so to gift to friends or family.
“Far from being a selfish choice to access property wealth via lifetime mortgages, retirement interest-only products or downsizing, the ability to gift to the next generation at the point they need it most can be priceless. Equity release can be the enabler that allows children and grandchildren to view homeownership as a realistic ambition rather than an unattainable dream and could potentially save them over £300K across 30 years.”
