05 December 2012
Tackling the ‘Great Injustice’ Facing Elderly Homeowners
The issue of caring for our aging population is an emotional one, and it was a real concern to hear the Archbishop of York, Dr John Sentamu, recently highlight the plight of “tens of thousands” of pensioners “forced to sell their homes to pay for care”. It’s easy to appreciate his sense that the situation is fundamentally “wrong”, and the longer it goes unaddressed, the more people will suffer. But there are ways that housing wealth can help the elderly to support themselves, without forcing them to part with their homes.
Equity release is a flexible choice that stops short of this drastic end, and instead lets you retain your property while releasing housing equity. Doing so can have a hugely positive effect on quality of life, for example, by providing funds for age related home renovations or domiciliary care. Indeed, many elderly people find that having a helping hand sooner rather than later delays the need for long term residential care.
Between January 2010 and June 2011, three local authorities trialled an equity release product designed for older home-owners to access small amounts of capital. This was highly successful and led to the Home Cash Plan being offered nationally by Age UK Enterprises and FirstStop. Between them, they recorded more than 1,200 enquiries about equity release in the first nine months of the scheme which clearly shows that there is a market for these types of schemes.
Equity release is one of a range of options that can help to correct the “great injustice” of which Dr Sentamu speaks, but it is an option of which not enough people are aware. It is worth noting the findings of the Joseph Rowntree Foundation, which reviewed the 2010/11 pilot. It found the level of consumer protection within equity release was underappreciated, both by elderly home-owners and front-line staff in local authorities.
As the sector’s industry body, we focus on ensuring consumers receive as much protection as possible, and our members sign up to a code which guarantees to offer substantial clearly defined safeguards to anyone taking advantage of equity release. Therefore, to ensure people do not have to sell their homes to pay for their care, we need to work together with external partners to better inform them of the available options, including releasing equity from their homes, to fund their life in later years.
Equity Release Council