21 Jun 2021
2021 has seen a huge surge in over 50s customers seeking equity release to undertake home improvements, increasing by 134% compared to the same period last year, according to data from Legal & General Financial Advice.
The business compared the first 5 months of 2021 to the same period last year, with the data showing a huge rise in the number of customers looking to unlock wealth from their home to make renovations. This initially shot up in August last year, and has been one of the main reasons for customers looking to take out a lifetime mortgage since.
Recent research commissioned by the Good Home Inquiry found that the majority (63%) of people approaching later life in England see home renovations as a priority in the next two years. However, half (50%) of those aged 50-70 said the main reason they would not be able to carry out all the renovations they want is because they cannot afford it.
The data also shows a 96% rise in the number of enquiries about gifting money to loved ones in the first 5 months of this year, compared to 2020. Research from Legal & General last year found 5.5 million parents expected to offer additional financial support to younger family members due to Covid-19, providing loved ones with an extra £1.9 billion1.
Requests to unlock cash for the purpose of gifting may come as parents and grandparents provide housing deposits following the Stamp Duty holiday, but the spike in requests may also be an indication of how the older generation has been relied on as a vital source of regular financial support for those hit by the pandemic.
Sara McLeish, CEO of Legal & General Financial Advice: "Over the past year we have spent more time in our homes than ever before, which has led to a rise in home improvements to make our homes as comfortable, enjoyable and functional as possible. As well as cosmetic improvements, as we get older it’s important our homes adapt as our needs change and renovations can be vital in improving accessibility. Sadly, many people are not able to undertake this vital work because they cannot afford it. Unlocking equity from the home is one possible solution for those who need extra money to make much needed improvements.
We know that the Bank of Family has been lending money for decades for things like house deposits but, during the pandemic, the older generation has been relied upon as a vital source of financial support. Our data shows there has been a significant rise in the number of older family members looking to use equity release to gift funds to their younger relatives, a trend that we expect to become more commonplace.
Giving money to a family member can be hugely rewarding and can often make good financial sense, but the key is not to lose sight of our own longer-term plans. There is a risk that people could be underestimating what they need to fund a comfortable retirement, and therefore it’s important to gift sensibly. This includes thinking about our own ambitions for our lifestyle in later life as we cautiously begin the transition back into our normal way of living."
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 Insurance (LGI) has been offering life insurance cover since 1836 and is the UK’s number one individual life insurance provider. Our group protection business in the UK offers life insurance and income protection products to individuals through their employers and we offer term-life insurance in the US. We now have over 5.5 million UK life insurance customers, 1.8 million people in group protection schemes and approaching 1.3 million US term-life insurance policyholders. Here in LGI, we protect our customers and their loved ones throughout life and death.
*at 31 Jun 2021