Press releases

Homeowners in England and Wales could access five years’ worth of retirement income from property wealth

Homeowners in England and Wales could release an average of £67,200 worth of equity from their homes, an average increase of £12k in just five years due to a 22% increase in median house price values since 2017. Homeowners in Wales are seeing the greatest potential growth as house prices rise three-times as much as the national average.

30 May 2023


Full press release

Homeowners in England and Wales could access the equivalent of five years’ worth of retirement income by using equity release, according to analysis by Legal & General Home Finance (LGHF) of median local house price data recently released by the Office for National Statistics (ONS)1.

The most recently available ONS data of median house prices in England and Wales, for the period up to September 2022, still showed an average increase of 2% over the last year, despite market volatility.

Unprecedented house price growth over the last five years, means homeowners would have seen an average increase of 22% in the value of their property. This would see the average homeowner able to access £67,200 through equity release, which equates to five years of retirement income, according to the PLSA’s most recent ‘Retirement Living Standards’ report published in January 2023. Equity release can be taken, tax free, from the property with no need to repay until the last homeowner passes away or moves into long term care. However, if a customer releasing £67,200 decided to service the interest, via an Optional Payment Lifetime Mortgage (OPLM), the monthly interest payment last year would have been £215.602.

Legal & General’s average loan in 2022 was £115k – indicating that homeowners with higher value properties are more likely to consider accessing the value in their homes through lifetime mortgages. The OPLM monthly interest payment for this amount last year was around £368.96, depending on the product taken.

Homeowners in Wales were likely to see the biggest increases in recent years to the amount they can release from their homes– with the amount rising by an average of 6% in the last year and 32% over the last five years. The local authorities with the biggest increase in property wealth potential over the last five years include Blaenau Gwent (51%), Leicester (45%) and Manchester (43%). 

Top 10 local authorities with the biggest percentage increase in equity release potential over the last year

 

Local authority name

Average equity release (24%)

Difference September 2022 with previous year (£)

Difference September 2022 with previous year (Percentage)

Blaenau Gwent

£30,000

£3,960

15%

Westminster

£238,800

£30,480

15%

Isle of Anglesey

£55,620

£6,720

14%

Three Rivers

£134,400

£15,600

13%

Kensington and Chelsea

£336,000

£36,000

12%

Elmbridge

£168,000

£18,000

12%

Pembrokeshire

£51,600

£4,752

10%

Ryedale

£66,000

£6,000

10%

South Hams

£92,400

£8,400

10%

Richmond upon Thames

£184,320

£16,320

10%

Ceredigion

£56,520

£4,920

10%

Craig Brown, CEO, Legal & General Home Finance: “For many homeowners aged over 55, the value of their property is still proving to be one of their most significant assets, so it is no surprise that a growing number of homeowners are considering the role it might play in their long-term financial planning.

“While equity release might not be right for everyone, it can make a significant difference to people’s retirement, so it is always worth fully exploring options with a qualified independent financial adviser. Planning for how property can play a role in that is something we anticipate will become more commonplace, whether that’s by downsizing to free up funds or releasing money tied up in your home through products like lifetime mortgages.”


References

1The average equity release customer accessed 24% of the value of their home in 2022, according to Legal & General Home Finance data.

Based on average property values across local authorities in England and Wales as per Office for National Statistics, House price statistics for small areas in England and Wales: year ending September 2022 (released March 2023), this would mean a median average of £67,200 worth of equity could be release from a property.

According to the PLSA’s most recent ‘Retirement Living Standards’ report published in January 2023, the minimum standard of income for a single person (living outside of London) is £12,800 per annum. These are current figures at the time of publication but are subject to review annually. The comparison with property wealth assumes no income tax is payable, as the amount released from equity release is tax-free.

£67,200/£12,800 = 5.25 years

2 Based on average Optional Payment Lifetime Mortgage (OPLM) homeowners, where the youngest borrower is aged 69 years old, to achieve an average release of 24% this would have been at a rate of 3.85% MER. External events resulted in rates varying at points throughout last year, but this rate offered through Legal & General’s Black product between 17th March to 6th June 2022 was the most steady period.


Further information

Microsoftteams Image

Claire Byrd

Senior PR Manager

Legal & General Retail

Notes to editors

Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.

Legal & General Retail helps create brighter financial futures for all our customers. The division covers the savings, protection and retirement needs of our c.13 million retail policyholders and workplace members.  

In 2022, we had total individual annuity sales of £954 million, and issued £632 million of Lifetime Mortgages and Retirement Interest Only Mortgages. Our Workplace pension platform served 4.9 million members, while our Protection businesses gave peace of mind to more than 6.3 million UK life insurance, 1.8 million group and 1.5 million US customers, taking in £3.1 billion of gross written premiums.

*at 31 Dec 2022