PROP­ERTY WEALTH IS KEY FOR OVER 65s

Rutherglen Reformer - - Info.. Info.. Info.. -

The use of hous­ing wealth to help fund a sav­ings short­fall is set to come into sharper fo­cus this year after the Chan­cel­lor voiced con­cern over “struc­tural is­sues” in per­sonal fi­nances.

Philip Ham­mond said last month that Bri­tons in­vest too much in hous­ing and, as a re­sult, he is to look at the is­sues sur­round­ing pen­sion sav­ings and the amounts ploughed into prop­er­ties in the UK.

It’s es­ti­mated that work­ers in the UK are un­der-sav­ing for re­tire­ment by up to £11bil­lion a year, while a surge in house prices means prop­erty wealth is at an all-time high and presents an im­por­tant sav­ings reser­voir for the over 55s to help boost fi­nances.

One way of free­ing up money tied into hous­ing is through eq­uity re­lease, which is avail­able to those aged be­tween 55 and 95, who own a prop­erty worth at least £60,000.

The amount of tax-free money re­leased varies de­pend­ing on fac­tors such as age and the value of the prop­erty, but the av­er­age amount re­leased in the UK by cus­tomers last year was £75,900.

Last year saw eq­uity re­lease hit an all time high, with the fi­nal fig­ure ex­pected to hit £2bil­lion after re­tired home­own­ers gained an av­er­age of £26,000 tax-free from their houses, ac­cord­ing to over-55s fi­nan­cial spe­cial­ists Key Re­tire­ment.

They re­ported that more than £114bil­lion has been added to the prop­erty wealth of the UK’s over-65 home­own­ers since the start of the year as the hous­ing mar­ket con­tin­ues to ex­pand, though there were falls in the value of home eq­uity in this age group in Scot­land be­tween Septem­ber and Novem­ber.

Dean Mirfin, tech­ni­cal di­rec­tor at KeyRe­tire­ment.com said the over­all prop­erty in­vest­ment fig­ures for 2016 high­lighted the ben­e­fits to the over 65s of own­ing a home.

He added: “Dur­ing a period of his­tor­i­cally low in­ter­est rates and in­vest­ment mar­ket volatil­ity, pen­sion­ers who have paid off their mort­gages have been able to rely on steady tax-free re­turns from their home – demon­strat­ing the in­creas­ing im­por­tance of prop­erty to re­tire­ment plan­ning.

“The eq­uity re­lease mar­ket is re­spond­ing with new prod­ucts and record low rates to en­able more cus­tomers to make full use of their prop­erty in­vest­ment and use their money for a wide range of pur­poses.”

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