Two pieces of press info this week show how property owners are ring-fencing wealth within their own families. The first was from L&G who reported record levels of equity release plans;
Older homeowners accessing the value held in their homes via lifetime mortgages and other forms of equity release are directly adding nearly £1.8 billion in GVA across the UK economy, according to a new report from Legal & General and the Centre for Economics and Business Research (CEBR). Spending funded by equity release is further estimated to support nearly £1.1 billion in in ‘indirect’ effects on GVA, as well as £0.9 billion in ‘induced’ effects of equity release spending on GVA, bringing the total impacts on UK economic activity to £3.8 billion.
The report found that in 2021, a record £4.3 billion was released via lifetime mortgages and other forms of equity release – an 11% annual increase. This money, previously tied up in the significant property wealth held by the UK’s over 55s, was then spent across a range of sectors, with some homeowners supporting family members with cash gifts.
WANNABE PROPERTY DEVELOPERS, NOT HOMEOWNERS
The second trend worth watching for insurance brands is the generation rent who have twigged that the key to getting rish is becoming a team of `flippers,’ who buy dilapidated properties, renovate them as per TV shows, then sell them on immediately pocketing a handy 50-100K profit.
Moveable released a bit of research this week that reveals 40% of Brits aged 18-34 are looking to buy a property to develop, as opposed to live in. This new generational trend comes after millennials saw a 30% increase in savings during the height of lockdown – enabling them to use this cash to invest in property. Match this to a cash gift from a parent or grandparent who has just gone to the Bank of Equity Release and you have the perfect recipe for flipping properties across the UK.
It also avoids the onerous process of becoming a landlord and dealing with bad tenants, compliance, repairs, inspections etc. Leave that to Housing Trusts, big insurers like L&G and large scale landlords.
WHERE ARE THE HOTSPOTS?
Moveable’s guide reveals similar signs of development between the Southern and Northern regions. However, they still lag someway behind London, with the Capital exhibiting the highest interest for developers, while cities such as Milton Keynes, Southampton, Oxford and Edinburgh follow closely behind.
Specialist cover is essential for junior property developers of course. Aston Lark, BJP, Marsh, Hazelton Mountford and many more can help.
IE’s top tip for flippers this summer is bungalows. They tend to have bigger overall plots, which opens up possibilities of putting two houses on one single plot, or creating a modern gated compound design, with a rear extension, summer house, storage/utility etc set outside the main dwelling. This has versatile appeal to families, couples and wealthier singletons alike.