Ensuring more of us have the means to enjoy later life devoid of financial struggle is the thrust of a new report by consumer group Fairer Finance.
It’s timely research which I trust attracts the attention of regulators and politicians.
The report suggests ways in which people could be encouraged to access wealth tied up in their homes to boost income in retirement.
Many homeowners have more wealth in bricks and mortar than they do in pensions, but do nothing with it. Sometimes as a result of not wanting to, but often because they can’t.
Without better prompting and incentives to utilise this idle housing wealth, Fairer Finance warns the country faces an impending ‘later life crisis’, with many entering retirement with insufficient income to fund a satisfactory standard of living. Property rich, income poor.
It argues that if some of this property wealth were unlocked, it could boost the UK economy through extra consumer spending (Rachel from Accounts, take note).
It would also enable more to live their later years in financial comfort rather than financial distress.
James Daley, managing director of Fairer Finance, says there are too many ‘social, economic and regulatory barriers’ which stop housing wealth being part of the retirement planning conversation.
Frustrated: Would-be downsizer Michael Clare and his home in Swindon
He warns: ‘If we’re to head off a later life funding crisis, policymakers need to start taking action now to bring down these barriers.’
The report comes up with numerous recommendations for helping release this equity.
The first is to make downsizing easier for retirees to facilitate. A cut in stamp duty costs – even better, its scrapping – is recommended.
This should be accompanied by building more retirement-friendly homes, providing downsizers with greater choice.
These suggestions are music to the ears of Michael and Lynne Clare, from Swindon.
In February last year, I spoke to Michael for an article on downsizing for Money Mail.
They were desperate to downsize from the four-bedroom home they had lived in for 37 years.
Yet premium prices for bungalows nearby meant a move did not make financial sense. A big impediment, too, was a likely stamp duty bill of £9,250.
When I caught up with Michael on Friday, the 79-year-old former salesman for food giant Del Monte (affectionately known to friends as the Man from Del Monte) said their mission to downsize was ‘ongoing’.
‘A bungalow makes sense because of our age but few are on the market,’ he said.
Though downsizing means release of a five-figure sum of equity, this will be bitten into by stamp duty of £10,000-plus (rates are higher than 15 months ago), plus estate agent fees, conveyancing and moving costs.
‘There are eight houses in our cul-de-sac and four are owned by people thinking of downsizing,’ he added.
‘But the system makes it difficult because of onerous stamp duty and a lack of suitable properties.
‘I can’t imagine Rachel from Accounts will be keen to cut stamp duty for elderly downsizers given the parlous state of UK finances.’
Fairer Finance’s report also calls for changes in the regulatory framework, allowing financial advice to be more holistic (based not just on financial assets but property wealth, too).
Permitting this would enable financial experts to talk to retirees about ways property wealth can be unlocked through downsizing or loans such as retirement mortgages and equity release loans (far more customer-friendly than ten years ago).
It also wants the government- backed Money & Pensions Service to embed housing wealth as a key part of its conversation with those who contact it for later life advice.
The Equity Release Council, representing lenders, commissioned Fairer Finance’s report although it had no influence on the editorial.
I trust Rachel from Accounts gets a copy and acts on some of its ideas. It could help save her government, her job and the UK economy from rack and ruin.
Don’t bank on Barclays not axing branches
Barclays’ annual general meeting in London last Wednesday was a rumbustious affair as the bank’s board attracted criticism on multiple fronts: branch closures, the company’s share price and its dividend policy.
To make matters worse, political activists also protested outside the meeting and disrupted proceedings once the AGM got underway.
Some of the criticism directed at the board seemed a little misdirected given the bank’s shares are up more than 40 per cent over the past year and annual dividends are tickling up quite nicely (8.4pence a share in 2024, compared to one penny a share in 2020).
Cutting back: Data from consumer group Which? shows that over the past ten years, Barclays had led the way in closing branches
Yet opprobrium over the bank’s demolition of its branch network was well justified. Data from consumer group Which? shows that over the past ten years, Barclays had led the way in closing branches – more than 1,200 of them.
Although the bank has opened ‘local’ services in some towns impacted by its branch closures, these replacements are minimalist with cash transactions not permitted.
In my hometown of Wokingham, for example, the ‘local’ – located in the community centre – is only open four days a week. Quite ridiculously, it shuts at lunch time which I thought would be its busiest time.
Meanwhile, the former Barclays branch, shut in August 2023, remains unoccupied and a blot on the high street.
I suppose, supporters of high street banking should take comfort from the assurance given at the AGM that the bank will be announcing no more branch closures this year or next.
Yet this is like a football team selling its six best players and then telling fans no more players will be sold this season or next – with any new recruits being inferior to those they replaced.
As Barclays confirmed to me on Friday, it has already stripped its branch network to the bone – just over 200 full-service branches now cling onto dear life.
Come 2027, I would put money on these branch numbers getting another severe haircut.
