With the Budget now presented, I think it’s more than fair to say that past couple of months of gossip and conjecture about what it would contain, undoubtedly caused way more harm than good.
Talk of sweeping Stamp Duty changes – even its abolition – ideas about shifting the tax burden to sellers, and hints that whole parts of the system might be torn up created a sense that something big was about to land. It did not.
Instead, as a result, many people paused plans in September through November in case the Chancellor handed them a win. That meant lost activity, delayed moves, and a cloud of doubt hanging over the market for no gain.
For older homeowners considering their options, that delay added to an already tense backdrop, with many waiting to see whether the Budget would change what they were able to achieve in the years ahead.
And so, while 99% of this speculation didn’t turn into actual change, wasting at least a few months’ worth of activity, what actually did arrive in Budget 2025 also brought with it some long-term pressure for pensioners and older homeowners.
The freeze on Income Tax thresholds, now stretched to 2031, will pull more pensioners into paying tax on their retirement income even when their earnings remain flat. The freeze in Inheritance Tax (IHT) bands will pull more estates into scope as home values continue to rise. The new Council Tax Surcharge for homes worth over £2m will raise costs further for people in areas where house prices have grown sharply.
These are not short-term issues. They reshape the tax position of older homeowners in a lasting way.
Some suggest the ‘Mansion Tax’ will push people to downsize. That does not reflect what we see. Most older people want to stay in the homes they know. They like their area, their set-up, and the life they have built.
Even if they do want to move, the supply of good-quality, smaller homes suited to their needs is far too thin. Without those homes, large shifts in behaviour are unlikely. Tax alone does not change the fact that suitable stock is hard to find.
The Office for Budget Responsibility’s (OBR’s) forecasts highlight another part of the challenge. The average mortgage interest rate paid by borrowers is expected to rise to around 5% by 2029, up from 3.7% in 2024.
Many older homeowners still hold mainstream mortgages, including interest-only loans reaching the end of term. Higher rates will limit their choices and make some routes far less workable. In this regard, it’s absolutely vital they must not just be shown only the standard finance options available to them, as there is no guarantee these are the most suitable.
They should be able to review every mainstream and later life lending product, including RIOs, TIOs, lifetime mortgages, etc, that might help them keep control of their home and their budget.
The OBR also expects the average UK home to rise in value from around £260,000 today to around £305,000 by 2030. That rise builds equity.
For many older homeowners, that equity will become more important as taxes rise and day-to-day costs increase further. It can help fund repairs, support family, manage tax bills, or give a buffer for the future. But it can only do that if people know how to use it safely.
This is where the later life lending market needs to step forward. It is already around £25bn, yet it should be bigger given the scale of need and the wide product range now on offer.
As mentioned above, too many older borrowers are shown a narrow set of choices, often based on mainstream routes alone. That does not match the reality of modern products. Today’s later life lending products offer borrowers far more control over payment levels, interest, and planning needs than older versions ever did. They are not fringe products. They are core options that should sit within the advice process when someone in later life needs support and solutions.
Older homeowners should never be told they have only one possible route. They should be taken through everything they can reach. That starts with proper affordability checks so they can see every product they may qualify for. It also means advisers reviewing their referral links. If they cannot give full later life advice themselves, they must work with a specialist who can.
Generalist advisers and wealth managers also need to bring property wealth into the main plan, not treat it as a separate subject. This is central to good outcomes, especially now that tax and mortgage pressures are rising at the same time.
This Budget, along with the wider work taking place in the regulatory space, are both clear signs older homeowners will need stronger support. The tax burden is rising. Mortgage costs are set to rise again in the coming years. House prices are predicted to keep climbing, drawing more estates into IHT even when owners feel far from wealthy. At the same time, many people want to stay in their homes for as long as possible. They want stability and control.
Later life lending gives them ways to achieve that. It offers clear structures that can help them handle new costs, plan ahead, or support family members. But the value of these products depends on access. Older homeowners now face a tougher landscape, and advisers have a key role in helping them handle it with confidence.
Dave Harris is CEO at later life lender, more2life
