Government Ministers have give their views on equity release during the business day at the Conservative Party Spring Forum.
Chairman of the Equity Release Council David Burrowes attended the event on behalf of the Council and was able to engage directly with several members of the cabinet.The event marked the start of a positive political period for equity release during which recommendations that could have damaged the sector were dropped. Spring Forum highlights included:
- Rt Hon Michael Gove, secretary of state for levelling up, housing and communities, said: “Equity release gives peace of mind as well as an opportunity to support loved ones”. He cited a review into housing in later life that is being undertaken by his junior minister Rachel Maclean MP.
- Rt Hon John Glen MP, chief secretary to the Treasury, welcomed Council proposals for using property wealth for social, economic and environmental challenges and supporting the wider economy. He acknowledged the close engagement with the Council and sees great value for equity release, particularly in social care and intergenerational use. However, he expressed concern about a reputation “overhang” and caution about any “deregulatory options”.
- Rt Hon Jeremy Hunt MP, chancellor of the exchequer, emphasised the value of regulatory autonomy post Brexit and the Edinburgh reforms. He highlighted Solvency II reforms and cautioned against unpicking regulation but improving a “growth mentality”. He discussed how energy efficiency is a key ambition and said he is looking forward to the output from Dame Alison Rose’s energy efficiency task force.
- Rt Hon Grant Shapps, secretary of state for energy security and net zero, provided reassurances around the Council’s concerns in relation to EPC implementation.
Following the Friday March 24 Spring Forum the Rt Hon Shapps’ comments were ratified when the government yesterday published its latest net zero policy.(Read here) the paper accepts some of the Skidmore review recommendations but crucially it does not require homes sold by 2033 to have an EPC rating of C or above. It also mentions Green Finance in some detail, which the Council is studying. The Council has previously challenged the government on the EPC ratings recommendations which would have had significant consequences for the equity release sector, if taken forward.Entitled Powering Up Britain
David Burrowes commented ““Property wealth, which for many people is their largest asset, has a key role to play in not only ensuring a healthy, economically stable retirement for many but also as a key contributor to a vibrant and green economy which benefits all generations.
“For consumers this can mean helping them pay for social care; gifting to younger generations to help them on to the property ladder; paying for home improvements resulting in greener more energy efficient housing; enabling people to stay in their homes independently for longer; or simply ensuring a happy and secure retirement.
“The potential of accessing billions of pounds of unused property wealth safely for the benefit of older consumers, their families, society and the economy, is significant. The Equity Release Council will continue to work in partnership with industry, Government and regulators to ensure that property wealth can play a full role in not only boosting the UK economy but also supporting the later life needs of so many of our population.”
There are two types of equity release: lifetime mortgages and home reversion plans. Both are regulated by the Financial Conduct Authority and both allow older homeowners to draw a lump sum or regular smaller sums from the value of their home, while remaining in it:
Home reversion Plans:
Customers sell all or part of their home in exchange for a lump sum or a regular monthly income, while remaining in the property typically rent free.
Customers know what portion of the property they have parted with and what has been ring-fenced for later use.
The share the customer retains remains the same regardless of changes in property values unless they take further sums. At the end of the plan the property
is sold, and the sale proceeds are shared according to the remaining share of ownership. Home reversion plans are normally only available to people over age 60.
The most popular type of equity release is a lifetime mortgage. When customers take out a lifetime mortgage, they retain full ownership of their home. All
products offer options to make voluntary capital or interest repayments. Otherwise interest can be rolled up with nothing to pay. The loan and any outstanding
interest is paid at the end of the plan.
Lifetime mortgages are only available to people aged 55 and over
Spectrum Independent is proud to be a member of the Equity Release Council.