Property wealth is helping to “change lives”

Property investment is not a quick fix, but rather a long-term financial solution to building wealth, as any good buy-to-let landlord will know.

While rental yields are important to some landlords, others are more focused on capital growth in order to build wealth, particularly those investing in property in London and the South East, where rental returns are typically among the lowest in the UK.

While there are a number of strategies which can be implemented when building a property portfolio, there is no denying the fact that focusing on capital growth is key to ensuring long-term success, as reflected by growth in equity release levels, which is expected to increase further this year.

The latest data from Key Retirement shows that retired homeowners, for instance, released £1.71bn of property wealth in the first six months of the year as the equity release market continued its record-breaking expansion.

Around £9.5m of property wealth was released every day in the six months to July with equity release plan sales growing by 29% on the same period of 2017, Key’s H1 2018 Equity Release Market Monitor shows.

The total value of property wealth released to the end of June increased by 37% on the previous year to £1.71bn from £1.24bn and plan sales grew to 22,816 from 17,656, as retired homeowners use their property wealth to boost their standards of living.

Dean Mirfin, chief product officer at Key Retirement, said: “Customer demand is driving the expansion in the market to new record highs enabling more retired homeowners to transform their finances.

“More money was released in the first six months of 2018 than in the whole of 2015 as records continue to be broken across the market with expert independent advisers playing a vital role.

“Property wealth is not just helping to transform an individual’s retirement planning but is also helping their families with their financial needs. The growth in gifting underlines how much can be achieved when the average amounts being released are as much as £78,000. The Bank of Mum and Dad, or Gran and Grandad are changing lives, and not just their own.”

Retired homeowners in London released an average £133,000 of property wealth each in the six months – the highest in the country – followed by the South East on nearly £90,000 and the South West on £77,000.

But every region saw strong growth in the value of property wealth released. The total value of property wealth released soared by 65% in East Anglia and plan sales surged by 50% in the West Midlands.

Other areas recording strong growth in property wealth released included the West Midlands at 62% and the East Midlands on 56% followed by the North East at 55%. Hot spots for rising sales of plans included the East Midlands at 45% followed by Northern Ireland on 43% and Wales on 42%. 

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