Several months ago an influential House of Lords select committee published a report called ‘Ready for Ageing?’ which urged the government to focus on Equity Release as a means of helping older people to improve the quality of their lives. Specifically, the report said that it was reasonable to expect those who had made windfall gains through the property boom to support their own longer lives by unlocking the wealth tied up in housing. It added: “Equity release could enable more people to use their assets to help pay for the cost of their social care, to adapt their homes, and to support their incomes.”
It remains to be seen exactly how the government will respond to the proposals, but it is clear that consumer confidence in equity release schemes – also known as lifetime mortgages – has never been higher. Products are becoming increasingly flexible, with the vast majority offering a ‘no negative equity guarantee’ and there are plenty of options available to ring-fence a fixed amount of cash in order to ensure an inheritance for family and friends. According to The Equity Release Council, over 100,000 people have taken out equity release loans in the last five years so the House of Lords proposals are built on a solid platform. Interestingly, a rising proportion of the finance raised via equity release funds has been used to help younger family members get a foothold on the property ladder.
Key to growth in the industry has been the development of loans with drawdown facilities, and given that several new lenders are rumoured to be entering the Equity Release market very shortly it is likely that further innovations will result, leading to a wider range of options for the ‘asset rich, cash poor’ generation.