Latest news with #housingwealth
Telegraph
24-05-2025
- Business
- Telegraph
Millions of us will only be able to retire if we cash in on our properties
Britain is edging towards a later life funding crisis. With fewer people reaching retirement with gold-plated 'final salary' pension schemes, increasing numbers are going to be hitting later life without enough savings to maintain our desired standard of living. The good news is that many of us are sitting on, and even sleeping in, a considerable store of wealth – our homes. The bad news is that accessing the wealth in our properties is not nearly as easy as it should be. Once your children have flown the nest, it makes sense to think about moving to a smaller property – leaving you with a cash windfall to spend on your retirement. But while many people would be keen to access their housing wealth that way – in practice, their options are often limited. If you've spent your life raising a family in a community with friends and other family, you probably want to stay there in retirement. Chances are, however, that wherever you live there is a sparsity of suitable property. For a start, there simply aren't enough retirement properties – in any part of the country. And where there are retirement homes, they often come with unreasonable service charges and collapse in value when they come to be sold. While governments of all stripes talk about the need to build more houses, you rarely hear politicians talking about the need to build more retirement homes. But we need them desperately. And we need proper regulation to help protect the value of these properties, and to control service charges. For those who don't want to move – or can't – there is also the option of later life lending, such as equity release. But this is a sector that is still shaking off a bad reputation from its early days 30 years ago, and many are wary about using it. In reality, equity release will be right for many retirees. But as things stand, there's a stigma about using these products, and they are rarely talked about as a mainstream option. Last week, my organisation Fairer Finance published a report showing that by 2040, more than half of retirees will need to use their property to maintain their standard of living in later life. But if we're going to make that possible, we need the Government and regulators to act now. Government advice and guidance services, like Pension Wise and MoneyHelper, need to start talking about housing wealth as a key plank of retirement planning. We also need technology to play a role – helping people see all their retirement assets, from pensions to savings to property, all in one place. I'd like to see public information campaigns that start to talk about housing as a key store of wealth that we should be using to help fund retirement. The Government should also look for other ways to incentivise downsizing, such as reducing or even scrapping stamp duty for 'last-time' buyers. The City watchdog also needs to make sure that its rules for different types of financial advisers and brokers support this wider conversation. Many more people are now carrying residential mortgages through into their 50s, 60s and 70s. When people come to remortgage it can be a great opportunity to engage them about the role their property wealth might play in helping fund their retirement. This should be a no-brainer for politicians and regulators. Our analysis shows that it could unlock over £20bn of additional consumer spending every year – a welcome boost for our economy. And more importantly, it will support all of us to live happier lives in retirement. As things stand, it's still difficult to make the most of your housing wealth. But there are increasingly good lending products and a growing number of retirement communities to downsize into.
Daily Mail
10-05-2025
- Business
- Daily Mail
JEFF PRESTRIDGE: There's now an utterly compelling case for scrapping stamp duty on downsizers
Ensuring more of us have the means to enjoy later life devoid of financial struggle is the thrust of a new report by consumer group Fairer Finance. It's timely research which I trust attracts the attention of regulators and politicians. The report suggests ways in which people could be encouraged to access wealth tied up in their homes to boost income in retirement. Many homeowners have more wealth in bricks and mortar than they do in pensions, but do nothing with it. Sometimes as a result of not wanting to, but often because they can't. Without better prompting and incentives to utilise this idle housing wealth, Fairer Finance warns the country faces an impending 'later life crisis', with many entering retirement with insufficient income to fund a satisfactory standard of living. Property rich, income poor. It argues that if some of this property wealth were unlocked, it could boost the UK economy through extra consumer spending (Rachel from Accounts, take note). It would also enable more to live their later years in financial comfort rather than financial distress. James Daley, managing director of Fairer Finance, says there are too many 'social, economic and regulatory barriers' which stop housing wealth being part of the retirement planning conversation. He warns: 'If we're to head off a later life funding crisis, policymakers need to start taking action now to bring down these barriers.' The report comes up with numerous recommendations for helping release this equity. The first is to make downsizing easier for retirees to facilitate. A cut in stamp duty costs – even better, its scrapping – is recommended. This should be accompanied by building more retirement-friendly homes, providing downsizers with greater choice. These suggestions are music to the ears of Michael and Lynne Clare, from Swindon. In February last year, I spoke to Michael for an article on downsizing for Money Mail. They were desperate to downsize from the four-bedroom home they had lived in for 37 years. Yet premium prices for bungalows nearby meant a move did not make financial sense. A big impediment, too, was a likely stamp duty bill of £9,250. When I caught up with Michael on Friday, the 79-year-old former salesman for food giant Del Monte (affectionately known to friends as the Man from Del Monte) said their mission to downsize was 'ongoing'. 'A bungalow makes sense because of our age but few are on the market,' he said. Though downsizing means release of a five-figure sum of equity, this will be bitten into by stamp duty of £10,000-plus (rates are higher than 15 months ago), plus estate agent fees, conveyancing and moving costs. 'There are eight houses in our cul-de-sac and four are owned by people thinking of downsizing,' he added. 'But the system makes it difficult because of onerous stamp duty and a lack of suitable properties. I can't imagine Rachel from Accounts will be keen to cut stamp duty for elderly downsizers given the parlous state of UK finances.' Fairer Finance's report also calls for changes in the regulatory framework, allowing financial advice to be more holistic (based not just on financial assets but property wealth, too). Permitting this would enable financial experts to talk to retirees about ways property wealth can be unlocked through downsizing or loans such as retirement mortgages and equity release loans (far more customer-friendly than ten years ago). It also wants the government- backed Money & Pensions Service to embed housing wealth as a key part of its conversation with those who contact it for later life advice. The Equity Release Council, representing lenders, commissioned Fairer Finance's report although it had no influence on the editorial. I trust Rachel from Accounts gets a copy and acts on some of its ideas. It could help save her government, her job and the UK economy from rack and ruin. Don't bank on Barclays not axing branches Barclays' annual general meeting in London last Wednesday was a rumbustious affair as the bank's board attracted criticism on multiple fronts: branch closures, the company's share price and its dividend policy. To make matters worse, political activists also protested outside the meeting and disrupted proceedings once the AGM got underway. Some of the criticism directed at the board seemed a little misdirected given the bank's shares are up more than 40 per cent over the past year and annual dividends are tickling up quite nicely (8.4pence a share in 2024, compared to one penny a share in 2020). Yet opprobrium over the bank's demolition of its branch network was well justified. Data from consumer group Which? shows that over the past ten years, Barclays had led the way in closing branches – more than 1,200 of them. Although the bank has opened 'local' services in some towns impacted by its branch closures, these replacements are minimalist with cash transactions not permitted. In my hometown of Wokingham, for example, the 'local' – located in the community centre - is only open four days a week. Quite ridiculously, it shuts at lunch time which I thought would be its busiest time. Meanwhile, the former Barclays branch, shut in August 2023, remains unoccupied and a blot on the high street. I suppose, supporters of high street banking should take comfort from the assurance given at the AGM that the bank will be announcing no more branch closures this year or next. Yet this is like a football team selling its six best players and then telling fans no more players will be sold this season or next – with any new recruits being inferior to those they replaced. As Barclays confirmed to me on Friday, it has already stripped its branch network to the bone – just over 200 full-service branches now cling onto dear life. Come 2027, I would put money on these branch numbers getting another severe haircut.
