PROPERTY WEALTH IS KEY FOR OVER 65s
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.”