Homeowners in England and Wales could access five years’ worth of retirement income from property wealth

·       Homeowners in England and Wales could release on average £67,200 worth of equity from their homes, an average increase of £12k in just five years due to a 22% increase in median house price values since 2017

·       Homeowners in Wales are seeing the greatest potential growth as house prices rise three-times as much as the national average

Homeowners in England and Wales could access the equivalent of five years’ worth of retirement income by using equity release, according to analysis by Legal & General Home Finance (LGHF) of median local house price data recently released by the Office for National Statistics (ONS).¹

The most recently available ONS data of median house prices in England and Wales, for the period up to September 2022, still showed an average increase of 2% over the last year, despite market volatility.

Unprecedented house price growth over the last five years, means homeowners would have seen an average increase of 22% in the value of their property. This would see the average homeowner able to access £67,200 through equity release, which equates to five years of retirement income, according to the PLSA’s most recent ‘Retirement Living Standards’ report published in January 2023. Equity release can be taken, tax free, from the property with no need to repay until the last homeowner passes away or moves into long term care. However, if a customer releasing £67,200 decided to service the interest, via an Optional Payment Lifetime Mortgage (OPLM), the monthly interest payment last year would have been £215.60. ²

Legal & General’s average loan in 2022 was £115k – indicating that homeowners with higher value properties are more likely to consider accessing the value in their homes through lifetime mortgages. The OPLM monthly interest payment for this amount last year was around £368.96, depending on the product taken.

Homeowners in Wales were likely to see the biggest increases in recent years to the amount they can release from their homes– with the amount rising by an average of 6% in the last year and 32% over the last five years. The local authorities with the biggest increase in property wealth potential over the last five years include Blaenau Gwent (51%), Leicester (45%) and Manchester (43%). [Full breakdown of all 331 local authorities in Notes to Eds]

Top 10 local authorities with the biggest percentage increase in equity release potential over the last year

“For many homeowners aged over 55, the value of their property is still proving to be one of their most significant assets, so it is no surprise that a growing number of homeowners are considering the role it might play in their long-term financial planning.

“While equity release might not be right for everyone, it can make a significant difference to people’s retirement, so it is always worth fully exploring options with a qualified independent financial adviser. Planning for how property can play a role in that is something we anticipate 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.”

Craig Brown, CEO, Legal & General Home Finance