Property to play role in wealthiest homeowners’ retirement plans

Just one in five of wealthier homeowners (20%) believe their property will not play a role in their retirement or inheritance plans, new research has indicated.

Findings from Standard Life Home Finance found that a quarter (25%) of respondents said their home is an inheritance for the next generation, while another 23% want to keep their home within the family and plan to gift it to the next generation.

Standard Life said its study, based on consumers over the age of 45 who earn over £75,000 or have £75,000 in accessible assets, suggested that with an average value home of £477,664 for this group, more advisers should be discussing this asset class with their customers.

As people approach traditional retirement age, the research suggested that the desire to leave the home as an inheritance starts to fall as people age (-7%), while the desire to keep the home within the family increases (+7%) as people 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 although would use equity if required – a figure that falls to 13% of those aged between 66 and 75 years old.

Director of sales at Standard Life Home Finance, Kay Westgarth, commented: “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.”

The study found that 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.

While 65% of wealthier homeowners said they do not have a mortgage, they did admit that they are seeing the costs of upkeep increasing. For those that do have a mortgage, Standard Life found that 40% said they are on a fixed rate and making repayments while 25% said they are on their lender’s SVR but don’t owe much so are managing.

“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,” Westgarth added. “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.”

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