Much has been said about Equity Release over the past 30 years. Today it is a fully regulated, safeguarded option for many homeowners aged 55 and over. It’s not right for everyone but with advice could open up a new window of opportunities for many in retirement. However there was a time where it was a less desirable option.
Those that took out a plan in the 1980’s could well have been ripped off by the ‘sharks’ that took advantage of a business that lacked regulation and protection. Its reputation was on the line. But with increasing pressure on the market consumer protection was sought and in 1991 Safe Home Income Plans (SHIP) was launched.
SHIP instilled a number of legislations that would not only protect the customer but set the foundations for a market that would grow year on year.
SHIP launched a membership programme that ensured the consumer would be protected if they took out a plan from one of their members. This meant…
• A guaranteed right to remain living in the property which is the subject of the equity release, either for life or until entry into long term care. • In addition there is a vital No Negative Equity Guarantee – which essentially guarantees that the amount to repay the equity release plan on death or entry into long term care can never exceed the value of the property itself, and so no debt can ever be left behind for beneficiaries of the equity release borrower. • New plans and providers would be encouraged to help improve the product offerings – driving better rates for the consumer.
In 2012; SHIP rebranded as the Equity Release Council (ERC) and working in conjunction with the FCA promoted Equity Release as a secure and regulated product to homeowners aged 55.
In 2017 the ERC has over 180 member firms and 500 individuals, including qualified advisers, solicitors/conveyancers, surveyors, and other industry professionals – each committed to the Council’s aims and objectives that aspire to ensure good outcomes for the consumer where protections and safeguards are a continuing feature.
In 2017 over 38,000 households took out a plan from an ERC member.
That accumulated to over 3 billion pounds released from home’s to help better consumers lifestyle in retirement. That’s more than doubled the 1.38 billion in 2014. Although still regarded as a niche solution the market is booming. Rates are the lowest they have ever been; as low as 3.74% in January 2018.
And Consumers are using it for a number of reasons:
In a market that is full of competition it’s no surprise that equity release is becoming an option for more and more people every year.
So perhaps now is the time to see if equity release could be right for you?
Sources: UK Market Monitor 2017 & Equity Release Council website.