News Review: Equity Release
How equity release will fit into the Big Society
by Andrea Rozario director general, SHIP
the coalition government has had its first 100 days in power so it’s time to take stock of all that has happened. the dust has finally settled after the upheaval of the election itself and the chancellor’s emergency Budget, and the much discussed spending cuts are starting to take place. throughout their election
campaigns, all three of the major political parties promised to address the problem of how to fund our ageing population – and now the time has arrived to see what action will actually be taken. one of the first steps
was the establishment of a commission into the Funding of care and
Support. i was pleased to see this swiftly followed by the secretary of state for health andrew Lansley’s announcement of its terms of reference. the commission will address the issue of long- term care – with the goal of looking for solutions that are sustainable, fair and offer individuals a choice in how they fund their own care. With the significant
amount of housing equity that this age group holds, SHiP firmly believes that equity release should be included as one of these options. i am especially pleased
that the commission, to be led by andrew dilnot, will cast its net far and wide when looking to various quarters for advice, one of which includes the financial services industry. it is vitally important that
key figures from this sector are involved in this important
Enjoying a better life I was encouraged by Age UK’s recent report –
Housing and Finance in Later Life – A Study of Equity Release Customers. The report, carried out by Birmingham University on behalf of Age UK, explored the sorts of people who are currently taking out equity release plans, their satisfaction with them and what they are using the released equity for. For a long time, there was the perception of equity release as being a last resort for those in financial difficulty – echoes of the impoverished widow abound. This is definitely not the case, and there is no typical equity release customer – their wants and needs are far more diverse than that. Indeed, Age UK’s report found that the equity
released from properties is frequently used to supplement an income – with 36% using it to fund leisure activities such as holidays, baby- boomers in particular were found to be using it not only to continue to holiday in the same
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discussion making process and SHiP will work to play a part in this. the findings of the
commission must put the interests of individuals first, protecting them and their assets during what is often the difficult and stressful process of arranging care. i’ve often made the point that equity release enables people to access the equity in their home without having to leave it, ensuring that they have the comfort of familiar surroundings. one of the coalition’s
moves to mark a new regime, as part of their “Big Society”, has been a major overhaul of the somewhat confusing benefits and welfare system. the current system can often prove complex and difficult to navigate which is why i welcome their review of it. as i’ve mentioned in
previous articles, recently SHiP has been campaigning
manner they had been accustomed to during their working life, but to take more exotic, trips- of-a-lifetime, holidays. As people are now retiring later they are even more likely to want to enjoy a “golden” retirement (and by that stage, definitely deserve one). The concept of the equity release customer as on the financial brink no longer stands. Rather, customers want to enjoy a better
quality of life and recognise that their home is an asset that can be used to achieve this. Many customers choose equity release as a way of passing on an early inheritance to their children or grand children. With longevity increasing, there is a view that a pre-inheritance is of more use to families at an earlier stage when they have considerable expenses such as getting on the housing ladder or paying education costs, rather than holding off until a later stage. There is also the added bonus of being able to witness how they benefit from it first hand.
for the clarification of the relationship between state benefits and equity release. SHiP’s campaign involved a survey of advisers to find out the problems they encounter when attempting to advise customers in receipt of benefits about equity release. at present there appears to be no clear and consistent channel of information highlighted by the government, leaving advisers unsure of whether to turn to the department of Work and Pensions, citizens advice Bureau or simply use the internet for guidance.
BRIGHT TIMES AHEAD We are entering a very exciting time for the equity release industry – advisers and providers alike. The Coalition government are committed to tackling social problems in a difficult economic climate – our ageing population cannot be ignored and the money to fund it must ultimately come from somewhere. I sincerely hope that amidst this time of change and progression that equity release is taken seriously as a way of providing answers to these outstanding questions. SHIP’s figures show that there is still an appetite amongst consumers for equity release. Let’s look to the future and in the spirit of coalition, aim for simplification and clarification for all those who work together in the sector, and most importantly their customers.
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