Alice Watson
Retirement Advantage responds to UK government’s white paper on housing
February 8, 2017: The new white paper on housing by the UK government plans to explore ways to stimulate the market to deliver new homes for older people. The white paper states that there are barriers to people moving out of family homes they have lived in for years.
The government is right to say that exploring new housing options for older people is a complex area. It actually exposes the need for a much bigger conversation about the role of property in retirement. Far from being simply a roof over our heads, tapping into property wealth to fund retirement, alongside pensions and other savings, is becoming the norm for growing numbers of people across the country.
When you consider that the amount we hold in property wealth massively outstrips what we hold in pensions, this is hardly surprising. For many people, the retirement we want will be out of reach financially if we do not consider how we use our property as a source of funding. Any measures which support the trend of downsizing from a bigger property to a smaller one could impact this.
At the same time, our research reveals that the vast majority of people want to stay in their current home when they retire.
Retirement Advantage’s latest report on property and pensions, Home Truths, reveals that 63% of people recognise their property is worth more than their pension. At the same time, 82% of homeowners want to grow old in their current property. Research for Home Truths was conducted by Censuswide between October 5 and 11, 2016, surveying 1001 UK adults aged 18 and over who are not retired, own a property and have a pension in place.
There is a huge gap between what we want in retirement and what our pensions alone will be able to fund. We need to break down the long-held views that we do one thing with our pension and ISAs and something different with our property. If the government ends up prioritising downsizing over other ways of using property, such as equity release, it may impact the ability of people to secure the best use of their property as a form of retirement income. This is especially true when you consider that retirees are often surprised at how little money is available once all the fees and taxes associated with moving house are factored in.
Alice Watson is Head of Marketing at Retirement Advantage Equity Release