Pensioners property soars during 2005

Amanda Jarvis

January 16, 2006

· £21 billion added to the value of pensioners’ properties over the final quarter of 2005
· Pensioners’ property equity value breaks £1.1 trillion barrier

The figures from Economic Lifestyle’s latest Pensioners Property Equity Index show that the nation’s 6.3 million retired homeowners have gained around £3,360 each in property wealth over the past three months or £7,670 over the past year.

Economic Lifestyle says that this could be the largest quarterly increase in property value that retired homeowners can realistically expect for a long time, as some predict the housing market will be more subdued in 2006, with only modest house price growth.

The largest year-on-year increases were in London, Scotland and the North of England, where on average house price increases saw retired homeowners gain between £9,293 and £16,005 each on the value of their properties.

This was also reflected in the most recent quarterly figures, which revealed that London’s retired homeowners were the big winners over the last three months of 2005, amassing around £8,893 each in increased property value. Collectively, this equates to a £6.91 billion rise.

However not all pensioners benefited as some regions saw house prices fall. A consistent decline in house prices in East Anglia and the South West saw the value of retired homeowners’ properties fall by £362 million and £1.62 billion respectively when compared to the same period in 2004. This equates to a £1,693 and £3,502 loss per retired homeowner respectively.

Mark Neal, managing director of Economic Lifestyle, said: “It is good news that pensioners are almost £50 billion better off than they were this time last year. However, the figures should not mask the reality of life for many retired homeowners in Britain today.

“Living in a valuable property while struggling to get by on the State pension does not make you feel wealthy. As increasing numbers look to improve their standard of living by accessing some of this ‘wealth’ through downsizing or equity release schemes, the news of an increase in property value should be welcomed.”

Economic Lifestyle has recently published a free Guide to Retirement Living, which members of the public can order by calling 0800 043 33 66. Economic Lifestyle offers retired homeowners a number of options for releasing some of the equity in their homes or to live in a property that they would not normally be able to afford. These include:

1. Life Interest Plan
The Life Interest Plan, a unique reversion scheme, allows people over the age of 65 to buy a home designed for retirement living at a fraction of its true value by selling their existing property then using part of the equity to buy a Life Interest in an Economic Lifestyle property. The retirement property then becomes their legal home for the rest of their life/lives allowing them to make the most of their retirement years with the remaining equity.

2. Cash Release Plan
The Cash Release Plan is a home reversion equity release scheme. Perfect for those aged 65 and over who wish to remain living in their current home and release capital at the same time. The property is valued by a qualified, independent surveyor, and after formal acceptance, the tax-free funds are transferred within 10-12 weeks, including a full refund of the valuation fee. There are no restrictions on how the money should be spent.

3. Find & Afford Plan
The Find and Afford Plan enables people to find a property that they want and Economic Lifestyle will buy it and lease it to them at a cost that is greatly below its market price. The property reverts back to the company on the passing away of the customer/s. It is also possible to opt for a part find and afford which allows them to release capital but also leave part of the property value to their estate.

4. Home Exchange Plan
For people taking out the Life Interest Plan or using the Find and Afford Plan, Economic Lifestyle can arrange a cash sale of their current home. This enables the retired homeowner to eliminate chains, stress, unwanted visitors and estate agents fees. Two free independent valuations are arranged from which the average is taken and an offer is made.

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