Regional variations in property wealth lead to division, says Sinclair


Regional variations in property wealth are likely to add to the feeling that parts of the UK have not been well looked after

The world of equity release is evolving. With a new record lending total of £1.58bn to the end of the third quarter of 2016, against a full-year number of £1.71bn in 2015, we look likely to top £2bn this year for the first time. New lending was up 35 per cent to £633.8m in Q3 itself, so the market is clearly on an upward spiral.

The average advance is £75,900 and, with only 21 per cent of advances being used to repay existing mortgages, we can expect this segment to grow as more people reach the end of their interest-only mortgage term and decide they want to stay in the house they have made a home.

The population has only around £2.5tn locked up in pension assets, in contrast to the ever-growing value of UK property. Indeed, total UK housing equity exceeds £5tn.

However, this property wealth is very regionally biased. With over £3.4tn of the total value of UK property (£6.2tn) being in London, the East and the South-east, large parts of the UK have much less housing equity to play with. The £135bn of value in the North-east, for example, may not do much to supplement pension income, as is the case with the £331bn in Scotland.

The risk to society is that this regional variation is likely to continue to drive the feeling that some parts of the country have not been well looked after – an attitude that contributed to the Brexit vote.

Nevertheless, as many people reach retirement with significant housing wealth but a limited amount in pension assets, equity release can be only a growth market. It may not make £5bn by 2020, but it is likely to do so not long afterwards.

Robert Sinclair is chief executive at Ami