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Value of private property hits record level as equity release deals surge

With the value of private property on the rise, there are a number of equity release products available. This can help fund retirements and further investment for people aged 55 or older.

For the first time, the total value of UK private property surpassed £6trn, according to a report from the Equity Release Council. This happened near the end of last year as market activity recovered following the first COVID-19 lockdown. Discounting any mortgage debt, the amount of private property equity reached a record £4.6trn.

Regular mortgage repayments are below pre-COVID levels. This is likely due to those who have been negatively impacted by the pandemic. However, mortgage-holders still made £5.1bn worth of overpayments in the last quarter of 2020. Mortgage overpayments even topped about £192m per day. This shows that some households were able to put more savings towards paying their home off quicker.

Equity release options rising

Equity release can be used to free up some of the cash from properties and is available to those aged 55 and over. This involves releasing a lump sum of money from the property or taking out smaller amounts at a time. In recent years, there has been a rise in the number of people taking equity out of their existing home to invest in another property.

The number of products available in the equity release market increased to a record high. In the second half of last year, 100 new products were added to make 488 in total. This is over double the number of products available two years prior. Additionally, access to retirement interest-only mortgages improved in 2020 with over 100 products available for the first time.

David Burrowes, chairman of the Equity Release Council, says: “After the unprecedented upheaval of early 2020, the equity release market showed signs of recovery as households and businesses remained resilient against a challenging backdrop.”

Retirement planning

Property can play an important role in retirement planning. Often property investment is viewed as one of the top additions or alternative to a pension. Some pensions are starting to decrease in real terms. Many people on the verge of retirement are beginning to consider all the options available to them. And property investment comes out on top when investing for the long term.

Some retirees are using equity release as a way to free up money for retirement. Many have benefitted from the drawdown after seeing significant capital appreciation in their homes over the years.

“Accessing property wealth will play a vital role in retirement planning, both now and in the years to come,” he states. “For today’s retirees, it can make the difference between making ends meet or enjoying a more comfortable lifestyle by boosting their pension income, improving or adapting their homes life and paying for domestic care support.

“For younger generations, it can open up the possibility of receiving a ‘living inheritance’ to support their own financial goals, such as getting on the property ladder.”

Increasing property wealth

Long-term property investment is continuing to provide strong gains for many property owners and investors. In the UK, property tends to increase in value of time. This means the longer you own a property the higher your returns will likely be. Compared to historically low savings rates, property is a long-term asset providing a much higher level of stability.

According to research by Savills, the total value of the UK’s housing stock hit a record high of £7.56trn. Despite the challenging past year due to the pandemic, house prices have increased rapidly. And long-term outlook for investment in the UK property market remains positive for the coming years.

David Burrowes comments: “Property wealth ranks second only to pensions in terms of its importance to household finances across the country. The transformation of later life mortgage products in recent years has given people more opportunities to access property wealth at affordable rates.”

Source: https://www.buyassociation.co.uk/2021/04/26/value-of-private-property-hits-record-level-as-equity-release-deals-surge/

Housing advice: coronavirus (COVID-19)

See GOV.UK for the government response to the coronavirus outbreak.

See the NHS website for health advice. 

Information on this page

The page is updated regularly. Last update 20 Mar 2020


Eviction

Can my landlord evict me straight away because of coronavirus?

It's illegal for your landlord to evict you without following the proper steps.

Illegal eviction is a criminal offence - coronavirus doesn't change this.

It's likely to be an illegal eviction if your landlord:

  • makes you leave without notice or a court order
  • locks you out of your home, even temporarily

You can get help from the council or the court if your landlord prevents you accessing your home.

What if I'm a lodger?

Your landlord still needs to follow the correct process even if you live with them.

They don't need to go to court but you're usually entitled to notice before you can be made to leave.

What if I've had notice from my landlord?

You should stay in your home.

Evictions take time and you don’t have to leave at the end of your notice under current law.

The government have also announced a new law that is expected to come in very soon.

Landlords won’t be able to take you to court for eviction for at least 3 months.

What if my landlord has already applied to court?

It isn't clear whether evictions will still go ahead if your landlord has already applied to court.

Courts are staying open for the moment in line with government guidance.

If you have a hearing you can expect it to go ahead unless your county court tells you of a change.

The court may arrange a phone or video hearing.

If you are self isolating, then you should not attend. Contact your court to let them know of your situation.

 

Rent payment problems

I'm worried about rent arrears. What should I do?

Speak to your landlord if you're struggling to pay rent. 

They could be sympathetic especially if you've lost your job or seen your income reduce suddenly.  

They might agree to a rent reduction or to accept rent late. Get any agreement in writing.

Buy to let landlords may get mortgage payment holidays if their tenants have financial problems due to coronavirus.  

Find out more about how to deal with rent arrears.

 

Mortgage arrears and repossession

I'm worried about mortgage arrears. What should I do?

Mortgage lenders have announced they won't apply to court to repossess homeowners for 3 months starting from 19 March.

They will also allow a 3 month payment holiday for those struggling to cover their mortgage because of coronavirus.

Be aware that this option may mean your monthly mortgage payment goes up after the payment holiday ends.

Check if you have insurance that will cover your mortgage payments instead. For example, mortgage payment protection insurance or through your current account.

Some mortgage providers are introducing other support for customers whose income is affected by the coronavirus outbreak. These may include:

  • no fees for late payments
  • switching to a lower interest rate

Speak to your lender to find out what support they're offering.

Read our guide on how to deal with mortgage arrears.

 

Income and benefits

I need to claim benefits. Where do I start?

You could qualify for benefits or statutory sick pay if you lose your job or can't work because you're sick or self isolating.

You could also get benefits if your pay goes down because of the coronavirus outbreak.

Find out more about what you can claim on the entitledto website

Can I apply for universal credit during the coronavirus outbreak?

Use the entitledto benefits calculator to check what you can claim before you apply - there are sometimes better options.

You can apply for universal credit on GOV.UK

Contact Citizens Advice if you need help with the online process.

Call the universal credit helpline on 0800 328 5644 if you:

  • can't apply online
  • need a universal credit advance
  • can't access your universal credit account once you've set it up

You can usually get a universal credit advance within a few days if you can't wait 5 weeks for your first payment. An advance must usually be repaid over the next year.  

Jobcentres are still open at the moment.

You won't have to attend Jobcentre Plus or medical assessments for at least the next 3 months due to the outbreak.

I get some housing benefit but now I've lost my job. How can I pay my rent?

You should report the change to the housing benefit department at the council. 

Your benefit will usually increase if you report an income drop promptly.

Sometimes you might need to move on to universal credit instead.

Read our guide on dealing with housing benefit changes

Apply for a discretionary housing payment if you get either:

  • housing benefit  
  • universal credit housing element

Landlord access to your home

Can my letting agent still go ahead with visits and inspections?

Tell your agent if you don't want unnecessary visits to your home at this time.

They should agree to postpone non essential visits such as:

Tell your agent if you can't allow access because you're self isolating. You don't have to give them details of your health.

What if I need repairs or a gas safety check is due?

Landlords have the same responsibilities for repairs during the coronavirus outbreak.

You should report repairs by phone, email or online.

You must tell your landlord if you're self isolating. They might not be able to get the problem fixed during the usual timescales but shouldn't delay repairs unreasonably.

Annual gas safety checks remain an important legal requirement. Your landlord should rearrange a gas safety check if you're self isolating.

Read about access to your rented home for repairs.

 

Moving out

Can I leave my tenancy early because of coronavirus?

You can only end a fixed term tenancy early if either: 

  • your contract has a break clause
  • you negotiate an early end to the agreement with your landlord

If you want to leave as soon as possible you'll probably have to negotiate.

Your landlord may be sympathetic to your request to leave if they understand your reasons. For example, if you need to move urgently because you or a family member are sick or need support.

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