Report urges advice reform to unlock £23 billion in home equity
More than half of UK households may need to rely on property wealth to fund their later years, potentially unlocking over £23 billion annually by 2040, according to new research from independent consumer group Fairer Finance.
The report, commissioned by the Equity Release Council, highlights a growing dependence on housing equity to maintain living standards in retirement, with the potential to inject an estimated £21 billion into the economy each year.
Income shortfalls prompt shift to housing assets
The study reveals that 38% of future retirees could fall short of meeting the minimum recommended living standard based solely on pension and savings income. Meanwhile, UK households typically hold more value in property than in pension pots, underscoring the gap between available resources and retirement planning approaches.
“It’s an inevitability that more people will need to rely on their housing wealth in retirement – and our new research shows the scale of the problem as well as the opportunity,” said James Daley (pictured left), managing director of Fairer Finance.
Modelling Reveals Demand Trends
New economic modelling suggests demand for housing equity peaks at two life stages: around age 65, when income needs increase before the state pension kicks in, and later in life, when individuals face care-related expenses or repay mortgages.
The study estimates that in 2040, about 18% of households aged 60 and over may draw on housing wealth, with a median lifetime withdrawal of £140,000. Annual equity accessed by retirees would equate to 0.5% of total housing wealth for that age group.
Five key policy changes proposed
Fairer Finance recommends regulatory and policy changes to better integrate housing assets into financial planning for retirement:
- Expand downsizing options: Increase the supply of attractive, age-appropriate housing in communities where older people live.
- Cut stamp duty for downsizers: Encourage mobility by easing financial barriers to moving.
- Normalise use of housing equity: Include housing wealth in official retirement advice platforms and launch public education campaigns.
- Unify financial data: Develop a tool to give individuals a single view of their pension and housing assets.
- Reform advice structures: Amend Financial Conduct Authority (FCA) regulations to require advisers to consider housing wealth when advising clients from age 50 onwards.
The report further urges the FCA to ensure advisers across mortgage and financial planning disciplines incorporate later life lending options into conversations with clients.
Comments from industry experts
“Fairer Finance forecasts property wealth taken in the form of later life lending could inject £21 billion into our economy each year from 2040,” reiterated Jim Boyd (pictured centre), chief executive of the Equity Release Council. “This substantial amount has the potential to act as a real economic stimulus supporting businesses and improving the living standards and spending power of our rapidly ageing population.
“Forty-five thousand UK jobs are already directly funded through money released from bricks and mortar – the growth of later life lending can potentially take this to another level.
“Whether an older person speaks to an equity release adviser, a mortgage adviser or a financial adviser, how they want or need to use their housing equity should be part of the conversation. Today’s report challenges us to develop a system that treats housing wealth as a core part of retirement planning, removes regulatory barriers and gives people the confidence to use it wisely.”
For Lorna Shah (pictured right), managing director of retail retirement at Legal & General, the report from Fairer Finance highlights the increasingly important role that property wealth will play in helping many people achieve a rewarding retirement.
“At L&G, our own research also indicates that equity release will become an increasingly mainstream source of income for retirees, in part due to the growth in property wealth,” Shah added. “As Fairer Finance sets out, the financial requirements of those in retirement will vary at different stages of their lives. These needs can range from paying off an existing mortgage, gifting to family, or making home improvements.
“For many, releasing equity from their home could be one of the most significant financial decisions made in retirement. Financial advice is critical in helping homeowners take a balanced, holistic view of the options available to them.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
