Home Wealth – Over £622 Billion Available in Equity Release

A recent report has highlighted a significant opportunity for homeowners over the age of 55 in the United Kingdom. They collectively have access to approximately £622 billion in housing equity that could be released to enhance their retirement lifestyles. This finding is based on the latest property value tracker from Canada Life, which has noted a slight increase from the previous quarter’s figure of £616 billion.

Regional Breakdown of Available Equity

The distribution of this potential equity release varies significantly across different regions. The areas with the highest available equity are:

  • London: With £118.4 billion
  • South East: Offering £111.5 billion
  • East Anglia: At £69.6 billion

Conversely, regions with the least available equity include:

  • North East: £16 billion
  • Wales: £24.7 billion
  • Yorkshire and the Humber: £37.2 billion

These figures reflect the regional disparities in property values across the UK, affecting how much homeowners can potentially release from their properties.

The Role of Equity Release in Retirement Planning

Sadna Zaman, a development manager at Canada Life Home Finance, emphasises that equity release is a valuable tool for unlocking the wealth tied up in properties. Despite economic challenges and uncertainties in the past year, the UK property market has shown resilience. Property prices have remained stable or even increased in some areas, thereby maintaining or growing the equity homeowners can access.

Equity release allows older homeowners to convert part of their home equity into cash, which can then be used for various purposes like supplementing retirement income, covering care costs, or funding home improvements. This can be especially important as other retirement income sources may not be sufficient. The Financial Conduct Authority has revealed that the most common withdrawal rate for pensions with a value up to £250,000 is 8%, which may lead some to deplete their pension funds more rapidly than anticipated.

Zaman also discusses the strategic use of equity release in retirement planning. While it’s crucial not to view equity release as a last-resort solution, it should be considered a significant part of financial strategies for later life. It offers flexible solutions tailored to the individual needs of customers, allowing them to meet their evolving requirements in later life.