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Nearly half of homeowners in England and Wales could access more funds from property wealth than the average pension pot
Homeowners in 53% of areas in England and Wales could access more than the average pension pot (£61,930)[1] by using equity release, according to analysis by Legal & General Home Finance (LGHF) of median local house price data from the Office for National Statistics (ONS)[2].
24 Nov 2021
- Homeowners in 53% of areas in England & Wales could be able to access more from the value of their home than is saved in the average pension pot (£61,930)
- In March 2021, homeowners in England and Wales could release on average £72,988 worth of equity from their homes, an average increase of £14k in just five years due to a 24% increase in median house price values since 2016
The most recently available ONS data outlining median house prices in England and Wales saw an average increase of 7.5% between March 2020 and March 2021 and of 24% between March 2016 and March 2021. Throughout 2021, house prices have increased even further.
Legal & General customers accessed, on average, 24.5% of the value of their home through equity release, putting the expected amount that can be accessed across England and Wales at £72,988. Due to the impact of the property boom, the average homeowner could access £5k more in 2021 than in 2020 and £14k more than five years earlier.
Ongoing house price growth has led many homeowners to consider the role their property might play in their long-term financial planning. One in seven pre-retired over 50s (16%) plan to use their property wealth to boost their finances via products like lifetime mortgages, a type of equity release, or via downsizing. However, an additional 13% said a significant increase in the value of their property could also convince them to do so.
While in previous years the highest increases were in high value areas of London, properties in Buckinghamshire Hertfordshire and Surrey were those that saw the most significant growth between 2020 and 2021.
Full table of areas with highest increases in Notes to Editors.
Claire Singleton, CEO, Legal & General Home Finance: “In recent years, we have seen house prices increase to the extent that they will have become the most significant asset available to many UK homeowners. House prices have increased by an additional 11.8% over the year to September 2021, alone [3].“We anticipate that using your home to fund your retirement 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. This, in turn, can have a broader economic impact, with our data demonstrating that every £1 released via a lifetime mortgage can generate £2.34 of economic growth.”
[1] Refers to average pension pot of a pre-retired person over 50. Opinium survey of 2160 UK Over 50s in the UK who have not retired between the 9th and 13th August 2021
[2] Office for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021
[3] Office for National Statistics, UK House Price Index: September 2021
For further information
Lewis Wilks
Lansons
T: +44 7903 260 560
Notes to editors
Established in 1836, Legal & General is one of the UK’s leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at FY23) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 7 June 2024, we estimate the Group’s Solvency II coverage ratio to be 224%.
As at 11 June 2024, Legal & General has a market capitalisation of £14.6 billion.
Legal & General Retail Retirement’s mission is to help its customers lead longer, healthier, happier lives. We believe everyone should be able to have a ‘more colourful retirement’. The Division comprises the Group’s retirement savings and income, later life lending and care solutions businesses. In 2020, LGRR wrote £910 million of annuity premiums and issued £791 million of lifetime and retirement interest only mortgages.
*at 31 Jun 2021