Wilson said the firm wanted to invest in building homes which were tailored to the needs of older people and help to grow the lifetime mortgage and equity release market.

Research cited in L&G’s Let’s House Britain report claimed in England 83% of the over 60s owned their own home, 64% of which were mortgage free. Wilson said a third of these homeowners wanted to downsize but could not find a suitable home to move to.

He said: “More people would downsize if the right accommodation was available in the right places near the three fs – family friends and facilities.

“If these properties were available it would free up properties for younger buyers so we need to build more homes for this segment “It will help people use the capital they have built up their homes which they have always thought of as part of their pension.”

L&G wants more modern one and two-bedroomed houses or homes which can cater for specialist needs which will allow people to stay at home for longer.

At the launch of L&G’s housing report last month Paul Smee, director-general of the Council of Mortgage Lenders, said the residential mortgage market and the equity release market needed to work together to tackle the callenges posed by the annuities sector.