Pensioners’ housing equity goldmine

Considering two thirds of homeowners over 60 get by on an income of less than £10,000 each year, only 1 in 10 know how much their homes are worth and just 6% would consider selling their property to raise capital.

Older people in the South East have benefited most from England’s buoyant house price increases and currently have £173 billion available to potentially improve their retirement financing. Over 60s in the North East had the smallest retirement goldmine with £30 billion available.

Despite the existence of this equity, the research revealed that most people in this age group were unaware of the real value of their homes with only 10% of respondents able to say that they knew precisely how much their house was worth. Those between 60 – 69 years old (13%) appeared to be more in touch with the value of their properties than older respondents (over 80 years old - 6%).

This low level of pricing knowledge is unsurprising as over half (54%) of over 60s admitted that they had never had their home valued and 30% said they last had it valued more than 10 years ago. With the value of homes in England rising an astonishing 213% since 1997, the difference between the perceived and actual value is likely to be significant.

Although selling a property to increase in-retirement income might seem to be the most logical option, over 60s appear to be very attached to their homes. Indeed, 68% would never consider selling their homes, although marginally more men (33%) than women (31%) expressed a willingness to move.

Of the remaining respondents, 26% would only consider finding a new home if life-changing events such as a partner’s death, decreased mobility or a move into long-term care occurred. However, as revealed above, a small number of over-60s (6%) did say they would consider selling their property to release money.

However, while this could potentially increase the amount of funds available, it is not without its costs – something that most respondents underestimated. The average cost of moving including expenses such as agency fees, stamp duty and solicitor fees is £9,500.

Only 20% of respondents would correctly budget this figure or more if they were to move. Of the remaining over-60s, 43% did not realise how much it may cost to move and 37% underestimated the cost of moving.

The refusal to consider moving and the attachment that the majority of respondents felt for their homes is unsurprising, as three in five (60%) respondents had been in the same home for over 20 years. Indeed, only 20% had been in their current homes for less than ten years.

With 94% of over 60s unwilling to sell their homes to improve their retirement income, there is a potential solution to this crisis that does not involve consumers selling their entire property – equity release.

Dominic Fraser-Smith, group product manager at Norwich Union Post Retirement Products, said: “It is upsetting to see that two thirds of over-60s are just getting by on £10,000 or less per year while sitting in what is potentially a retirement goldmine that could dramatically improve their quality of life.

“Equity release offers consumers the opportunity to access the financial value of their property without incurring moving costs or leaving the home they love, so it can be a handy solution to a difficult problem.”