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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
London 27 years +£384,944 £14,257
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
Scotland 23 years +£99,009 £4,304
Yorks/Humbs 22 years +£104,251 £4,738
South East 21 years +£232,682 £11,080
Wales 21 years +£95,999 £4,571
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.
 

Region
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
London £173.731 billion 15.84% 366,000
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
Yorks/Humbs £44.805 billion 4.11% 288,600
Scotland £41.174 billion 4.06% 282,000
Wales £40.483 billion 3.71% 264,600
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