No Place Like Home: Future Generations May Never Own Their Homes

No Place Like Home: The Dwindling Prospects for British Pensioners as Future Generation May Never Own Their Homes

Research Reveals Home Ownership Amongst UK Retirees Set to Decrease from 78% to 63% by 2041
 
The UK’s housing market’s disproportionate growth compared to wages has made homeownership in Britain increasingly challenging; Rudy Khaitan highlights how equity release helps pensioners access capital during the UK’s cost-of-living crisis
 
Key stats:
 

• 18% say their quality of life is going to deteriorate because they don’t have enough money in their pension funds
• 21% have paid off their mortgage but admit their pension payments still don’t allow them to live a fulfilling life
• 15% say their biggest mental health strain is worrying about funding their retirement 

 
Data from the Office of National Statistics (ONS) shows that by the end of 2023, the average house price in England and Wales was 8.1 times the average income, with insufficient new home construction exacerbating the issue. Alongside this, analysis by the Pensions Policy Institute forecasts a significant rise in retirees renting or paying off mortgages, with home ownership predicted to decrease from 78% to 63% by 2041. This trend has profound implications for pensioners as housing costs limit pension savings. With the pensions industry facing monumental challenges as UK retirees with annuities need up to 40% more in their pension pots to cover housing costs, research from Senior Capital – the UK’s leading later-life asset platform – also highlights the devastating impact the cost-of-living crisis has had on Brits’ ability to contribute to their pensions, unveiling that 35% of Brits are currently unable to fund their future retirements.

With disposable household income per head predicted to decline by 1.5% according to the Office for Budget Responsibility (OBR) in 2024, Britain’s recessionary climate has seen the cost-of-living crisis force 32% of the nation to halt personal contributions to their pension pot. Senior Capital’s research additionally found that this recent financial strain has forced 21% of individuals to postpone retirement and continue working, fearing they lack sufficient funds in their pensions. The ramifications extend beyond financial concerns, with 25% reporting that their greatest mental health burden stems from worrying about funding their retirement. Additionally, 37% express profound anxiety about their quality of life diminishing due to inadequate savings. These figures underscore the pressing need for comprehensive measures to address the escalating cost-of-living and its profound impact on retirement planning in the UK.
 
The Rise of Equity Release:
 
Amidst this new wave of pensioners who find themselves living on the poverty line, equity release loans have experienced a record 23% year-on-year increase as a vital lifeline amidst the cost-of-living crisis. According to the Equity Release Council, over 93,000 Brits took out this type of plan/loan in 2022. To create financial liquidity, stability and a better quality of life, Senior Capital was created to serve a growing number of homeowners looking to access capital from the £800bn currently tied up in property wealth.
 
Rudy Khaitan, comments on the benefit of accessing capital for those approaching retirement age through equity release products:
 
“In today’s society, many over 55s find themselves in a paradoxical situation – they are ‘asset-rich’ due to the value of their homes, yet ‘cash-poor’ with limited disposable income. As the cost of living continues to rise, many find themselves struggling to make ends meet, despite owning valuable properties.

“Equity release offers a solution to this dilemma by enabling homeowners to tap into the wealth tied up in their homes. It can provide a much-needed cash injection to enhance their quality of life, cover unexpected expenses, or even help their families. Equity release is more than just a financial transaction; it’s a means of bridging the gap between asset wealth and living standards, ensuring that those who have worked their whole lives to build their assets can finally reap the benefits of their hard work.”
 
Rudy Khaitan is Managing Partner of Senior Capital – the UK’s leading later life lending specialist