Over two thirds of people plan to stay in their own home in retirement
Almost 14 million people in the UK plan to remain in their current home in retirement and of those an increasing percentage will use their property to generate income through equity release, a new study suggests.
Figures from the research by Canada Life Home Finance show that 69% of adults say they will remain in their current home in old age, when asked what they are most likely to do with their main property in retirement.
This finding is a 5% increase in three years, compared to when the survey was last carried out in 2016. The second most popular option was downsizing at 24%, with less than 4% of those surveyed saying they would sell or rent their house when they retire.
‘The findings from this research are important given the current concerns surrounding how people will fund their retirement. Whilst average life expectancies continue to increase, people will need to spread their savings further in later life,’ said Alice Watson, head of marketing and communications at Canada Life Home Finance.
Of respondents who said they will stay in their home, 6% plan to release cash from the property, up from 5% in 2016. This increase is in line with the growing popularity of equity release options, which includes lifetime mortgages.
The latest figures from the Equity Release Council reveal that in the first two quarters of 2019, £1.85 billion was lent to customers using equity release, more than double the amount in the first two quarters of 2016 at £908 million.
Lifetime mortgages are an increasingly popular form of equity release because, for many people, a large proportion of their wealth is tied up in the value of their home. According to Government data, house prices have increased by more than 280% in the last 30 years.
Watson pointed out that few people are budging in retirement. ‘Instead, they are ageing in place, preferring to remain in their own homes for as long as possible. There may be several reasons for this: to keep the family home, stay close to friends or remain in comfortable and familiar surroundings,’ she explained.
‘Whatever people’s motives, it’s important that the industry makes clear that equity release is a way for people to retain ownership of their property, age in place and boost their retirement income,’ she pointed out.
‘If people want to grow older in their homes, then they might need to make improvements, to make life more comfortable and their property more accessible. Our customer data shows that this is one of the key reasons why people use equity release,’ she added.