Housing for an ageing population and equity release

The Centre for the Study of Financial Innovation (CSFI) has published the report: Too Little, Too Late? Housing for an ageing population. Equity Release Council chief executive Jim Boyd reflects on the findings.

To make good decisions consumers need choice and, like the CFSI’s latest report, the Council has long since called for the Government to better support older people’s downsizing options. Doing so will give people in later life more options when they consider how best to plan their lives in retirement.

The report recognises that many wish to downsize when they reach retirement but have limited options. It also recognises that over-65s often choose to continue living in their current homes. Many homeowners want to live in their property for as long as they can in later life and often share that home with multiple generations. Furthermore, many people want to keep on living in the communities that are so important to them and where they have strong associations and memories.

In addition to evidence of multi-generational living, our research found that almost three in four (72%) of homeowners aged 45+ want to live in their property for as long as they can, and this ‘home for life’ mentality grows stronger with age: rising to 77% among those aged 65-74 and 89% beyond 75.

While policymakers consider ways to encourage downsizing it is important to recognise this is not a binary decision. For people who have already raised capital by downsizing earlier in life, equity release provides an important way to supplement their retirement income in later years and pass on a living inheritance to family members. Rapidly expanding product choice in the equity release market has provided more repayment flexibilities for customers who want to downsize in the future, instead of taking the loan with them when they move.

Looking ahead, flexible home finance options that unlock property wealth have the potential to transform the UK’s existing housing stock to improve carbon efficiency levels by encouraging retrofitting and making green home improvements. Providing access to ‘green equity release’ products would help people unlock cash to fund energy efficient improvements and retrofit properties to meet environmental as well as care-related needs.

The Council supports the call for a more joined-up approach between Government departments dealing with housing and health for older people. We believe there should be a Minister for the Elderly who can ensure broader social and financial issues are co-ordinated across all policy areas that impact our ageing population.

Equity release is not suitable for every circumstance and that’s why it must be a choice. One that should be on all retirees’ checklist to consider as part of financial planning in later life, through a rigorous process of regulated financial advice and independent legal advice.