New research suggests that just one in five (20%) wealthier homeowners believe that their property will not play a role in their retirement or inheritance plans.
Instead, research* undertaken on behalf of Standard Life Home Finance with consumers over-45 years old who earn over £75,000 or have £75,000 in accessible assets, suggests that with the mass affluent factoring their home (average value – £477,664) into their retirement planning, more advisers should be discussing this asset class with their customers.
Inheritance is key
A quarter (25%) say their home is an inheritance for the next generation and another 23% want to keep their home within the family and plan to gift it to the next generation. Interestingly as people approach traditional retirement age, the desire to leave the home as an inheritance falls as people age (-7%), while the desire to keep the home within the family increases (+7%) as people arguably become more attached to their home and its memories.
Just 19% of wealthier homeowners do not see a role for property in later life planning – falling to 13% of those aged between 66 and 75 years old.
However, over a third will look to their homes for financial support
More than one in three (38%) plan to look to their homes for support in retirement with 19% planning to access their equity if they need it, 15% looking to downsize to boost retirement assets and 4% already planning to access the equity in the homes.
| All | 45-55 | 56-65 | 66-75 | |
| I do not anticipate my home playing a role in my retirement | 20% | 15% | 25% | 22% |
| My home is an inheritance for the next generation, and I am planning for this | 25% | 29% | 19% | 22% |
| I want to keep my home within the family so I will be gifting it to my children | 23% | 15% | 25% | 22% |
| I do not anticipate my home playing a financial role but will use some equity if I need to | 19% | 16% | 25% | 13% |
| I plan to downsize to a smaller property and boost my retirement assets | 15% | 18% | 12% | 16% |
| I plan to access the equity in my home to support my retirement | 4% | 3% | 4% | 3% |
| Average Value of home | £477,664 | £507,693 | £462,609 | £466,072 |
| No. years left on mortgage | 7 | 8 | 5 | 3 |
While 65% of wealthier homeowners say they don’t have a mortgage, they do admit that they are seeing the costs of upkeep increasing. For those that do have a mortgage, 40% say they are on a fixed rate and making repayments while 25% say they are on their lenders SVR but don’t owe very much so are managing.
One in ten (11%) say that while their mortgage repayments haven’t changed, other household bills increasing has made it tricker to manage and the 4% who need to remortgage in the next six months are concerned about what the increase will mean.
Kay Westgarth, Director of Sales at Standard Life Home Finance, said:
“With four out of five wealthier homeowners planning to factor their homes into their later life planning – either as an inheritance or source of finance – the support that intermediaries can provide clients by having ongoing conversations about making the most of all your retirement assets is invaluable.
“Given the relative wealth of the clients, it is easy to understand why inheritance tax planning is likely to be discussed before accessing housing equity to boost retirement income or for gifting. However, with over third (38%) of these consumers seeing their property as an accessible asset, intermediaries need to broaden these discussions.
“Speaking to our own customers, we know that many of them are wealthier than average and are already using the equity in their homes to support family or boost retirement income. So far from being awkward or unwelcome, including housing equity into financial planning discussions is likely to be welcomed or at the very least expected.
“With the introduction of Consumer Duty on the horizon, these types of conversations will become increasingly commonplace and taking the time to work them into your day-to-day advice discussions will pay dividends.”
For more information please visit: https://www.standardlife.co.uk/equity-release.
