More than one in five homeowners aged 55 or over – the equivalent of around 3 million people1 – have not considered how they will pay for potential care costs in later life, says the National Housing Federation, amid fears that many could be wrongly assuming that the value of their home will cover the cost.
As life expectancies grow, adult children rely on the ‘bank of mum and dad’ and pension pots shrink, a new report warns that home equity will stretch only so far.
The National Housing Federation report reveals that many ‘self-sacrificing seniors’ are already using equity in their homes to help adult children or grandchildren with their housing costs, as well as prioritising saving money to help their children on the housing ladder, with new research showing that:
- Around 1 in 7 (15%) homeowners aged 55 or over are prioritising saving to help their children or grandchildren with their housing costs
- Almost 1 in 10 (9%) of those who have released equity, or may consider doing so in the future, said it was to help their children or grandchildren with their housing costs, including house deposits or rent.
- Only 15% are prioritising saving for care costs in later life.
The research also reveals that in order to pay for the potential care costs, 28% have already, or think that they may, sell their home and downsize and 13% have, or think that they may, release equity from their home. But with a polarised housing market and unprecedented levels of inequality in income and wealth, homeowners with lower value homes could find worrying holes in their finances.
With many care costs set to fall outside of the government’s new care cap of £72,0003 which comes into force next year, some people will find themselves needing well in excess of this figure to pay for their care in older age.
The National Housing Federation is calling for affordable homes designed for older people with integrated care services to be built and say that it’s essential that homes designed to suit older people are given as much priority as homes designed for first-time buyers and younger families.
David Orr, chief executive of the National Housing Federation, said: “Hundreds of thousands of new homes for older people are needed across the country that offer flexible care and support services at an affordable price.
“We need to face up to the needs of our growing older population and the looming crisis that awaits us if we don’t.
“The housing crisis affects everyone and rather than being able to enjoy their retirement, many older people have to choose between setting aside money for possible care costs or helping their children on to the housing ladder.
“Ahead of the election we are calling for all political parties to commit to end the housing crisis within a generation and that must include delivering the range of housing and care options we need for our ageing population.”
The National Housing Federation is part of the Homes for Britain coalition that wants all political parties to commit to end the housing crisis within a generation. It’s calling for the next government to publish a long-term plan within a year of taking office that sets out how they will achieve this.