Marvin OnumonuEquity release could help more than half of pensioners across the UK enjoy a more comfortable retirement, research from Fairer Finance for the Equity Release Council found.
Research found that 51% of households aged 60 and over could have a better and longer retirement by using equity release.
Data also showed that accessing housing wealth could unlock £23bn a year in extra spending power by 2040 and help close regional gaps in retirement funding.
In the North East, where average annual pension income is £16,380 and the gap to the moderate retirement standard sits at £15,320, the median house price is £164,000.
Releasing 40% equity, or £65,600, could give pensioners enough to top up their income for 4.3 years or fully fund two extra years at the moderate level.
In the West Midlands, where average pension income is £16,440 and the gap is £15,260, homeowners could unlock £98,800 with 40% equity release, enough to top up for 6.3 years or fully fund 3.1 more years.
London has the highest property values.
With average pension income at £17,160 and property prices at £561,000, releasing 40% equity is worth £224,400.
This could top up retirement income for 15.4 years or fully fund seven extra years at a moderate standard.
In the South East, pensioners could access £153,200 with 40% equity release, closing the shortfall for 12.3 years or funding 4.8 extra years.
In the East of England, 40% equity release is £135,200, topping up income for 9.8 years or fully funding 4.3 years.
The report called for five key changes: more retirement housing, lower stamp duty for downsizers, making housing wealth part of retirement planning advice, giving people a combined view of pensions and property wealth, and reforming advice rules for later life.
Jim Boyd, CEO of the Equity Release Council, said: “The UK’s retirement landscape is changing fast.
“Many people have more property wealth than housing wealth and property will form an increasingly important asset to fund longer lives in retirement.
“Yet, too few people know it’s an option or feel confident exploring it.”
Boyd added: “Our findings shine a light on the potential for housing wealth to provide better retirements for people across the UK, especially in regions like Yorkshire and the Humber and the North West, where pension incomes are lower but property wealth remains strong.
“Millions of older homeowners are asset-rich but income-poor, and are often unaware that their home could be the key to a more secure retirement.
“The estimate that people may unlock £23bn a year by 2040 highlights how transformative the use of property wealth could be for our rapidly ageing population and for the wider economy by increasing older people’s spending power.”
He said: “We now need to break down the barriers to using housing wealth confidently and safely, from outdated perceptions to fragmented advice.
“This isn’t about pushing people in one direction. It’s about giving everyone access to trusted guidance and flexible options, so they can make informed choices that work for their circumstances, wherever they live.”
James Daley, managing director of Fairer Finance, said: “The relaunch of the Pensions Commission shows that this Government understands the severity of the impending later life crisis.
“While the Commission will hopefully unlock new ways to get people saving more for retirement, its actions will come too late for those who are already approaching later life without adequate provision.
“For many in this generation, using their housing wealth will be a vital lifeline to support a decent standard of living in later life.”
Daley added: “But there’s still work to be done to ensure people can access their housing wealth.
“It’s crucial that the Government does not lose sight of the problem facing the next generation of retirees, while it looks for a solution for future generations.
“Our report makes a range of pragmatic policy suggestions to ensure more people can use their housing wealth in retirement – and we urge Ministers to act on these as soon as possible.”
