Pensioners earn £7,000 a year from their homes
11 June 2018
The average over-65 homeowner in Great Britain has seen property wealth gains worth £159,000 – the equivalent of £7,000 per year in the 23 years they have owned their home, analysis* from leading over-55s financial specialist Key Retirement shows.
Over-65s in London have been the biggest winners with property prices soaring by £394,944 over the 27 years they have on average owned their homes – equivalent to £14,257 a year. Homeowners in the South East (21 years) are more than £230,000 better off from buying a property while over-65s in East Anglia (18 years) have seen gains of £206,000 during the average time they have owned their current home.
All areas of the country have recorded strong gains underlining the long-term investment success of home ownership and the growing importance of property wealth for retirement planning. Total property wealth owned by over-65s who have paid off their mortgages is near a record high of £1.09 trillion, Key’s Pensioner Property Equity Index** reveals.
The table below shows how long on average retired homeowners have owned their property and the total and annual tax-free gains they have made.
|REGION||HOW LONG THEY’VE OWNED||AVERAGE GAIN||AVERAGE ANNUAL GAIN|
|North East||25 years||+£77,381||£3,095|
|East Midlands||24 years||+£131,736||£5,489|
|North West||24 years||+£100,461||£4,185|
|West Midlands||24 years||+£128,697||£5,362|
|South East||21 years||+£232,682||£11,080|
|South West||19 years||+£168,839||£8,886|
|East Anglia||18 years||£206,415||£11,467|
|GREAT BRITAIN||23 years||+£159,129||£6,918|
These gains are helping deliver a major boost to retirement standards of living as the equity release market expands with customers*** releasing an average £77,380 of property wealth and nearly £134,000 in London and £91,000 in the South East.
Dean Mirfin, Chief Product Officer at Key Retirement said: “The long-term strength of the housing market is demonstrated by the fact that on average over-65s are making nearly £7,000 annually from their homes rising to more than £14,000 a year in London.
“Property wealth of more than £1 trillion enables pensioners who have paid off mortgages to generate returns which are making a huge contribution to their standard of living in retirement. They are also helping family and friends with 26% of equity release customers saying they used some of the proceeds as financial gifts.
“That is feeding through to rapid expansion of the equity release market and underlines why thousands are using their property wealth to transform their own and their families finances.” The table below shows over-65s in the North West are most likely to own outright with 671,000 having paid off mortgages compared with 656,000 in the South East.
|Estimated property equity in homes owned outright by people aged 65+ (April 2018)||Estimated percentage of total value of property equity belonging to people aged 65+ (April 2018)||Number of households in the region owned outright by people aged 65+|
|South East||£210.367 billion||19.29%||656,000|
|South West||£156.549 billion||14.35%||626,600|
|East Anglia||£137.547 billion||12.61%||472,000|
|North West||£105.656 billion||9.69%||671,000|
|East Midlands||£79.658 billion||7.3%||431,200|
|West Midlands||£67.629 billion||6.2%||358,400|
|North East||£34.204 billion||3.14%||275,000|
|GREAT BRITAIN||£1.090 trillion||4,691,400|
Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6010 or visiting: https://www.keyadvice.co.uk/equity-release/request-a-free-guide
**Key Retirement research among 2,246 clients in Quarter 1 2018 ** Key Retirement’s Pensioner Property Equity Index tracks the amount of equity held in property by people over 65 years old in Great Britain. Figures are based on analysis of data from the ONS Family Spending Report (2014), the UK House Price Index, Registers of Scotland House Price Statistics and ICM (2014) and Key Retirement’s UK Equity Release Market Monitor. *** Key Retirement market data for 2017 The Monitor uses Key’s data to reflect the market as a whole. The data reflects both members and non-members of the Equity Release Council, and provides the most detailed analysis of the equity release sector