For most of us home is where the heart is and it’s certainly the place where we feel most comfortable. It is therefore unsurprising that most people in or around retirement age would, if given the choice, prefer to stay in their home and would only move, for example, into a care home as a last resort. This feeling is perhaps indicative of our ‘home is our castle’ mentality and, as far as I’m concerned, there is absolutely nothing wrong with this sentiment and as a society we should be doing much more to keep our older population in their properties.
Speaking to equity release advisers one of the key concerns clients often raise when discussing whether to take out a product or not is the issue of what happens to their home once the deal is complete. Many still labour under the misapprehension that the equity release provider will have carte blanche to eject them from their home at the drop of a hat. Indeed, this is one of the main objections that we as an industry need to tackle if we are to secure greater consumer confidence in equity release.
Of course, nothing could be further from the truth and in fact by opting for equity release the client is actually maintaining security of tenure for life, or until they might need to go into long-term care. Judging by the latest results of the Equity Release Council’s research many individuals currently of retirement age want nothing more than to be able to stay in their own homes throughout their retirement. The Council figures suggest 70% of over-65s want this however the sticking point is that just a third of those can do it safely.
The big issue is of course the fact very few properties are in the correct state in order to safely house pensioner dwellers. At the very least many homes will need work and repairs carried out in order to meet the requisite safety threshold; this is without thinking about future significant modifications, for example, stair lifts, which may be required. I am quite aware there is a whole army of people in the UK who do not have the necessary income to make their home safe let alone make such changes which would greatly improve their standard of living.
The Council suggests that a staggering 2.8m people are living in homes which require a certain degree of financial investment in order to make them safe places to live. Apparently it is areas such as staircases, gardens and bathrooms which need most attention. Unfortunately 18% of over-65s have a savings pot of less than £10k to draw upon and this may be earmarked for other areas of life, such as cost of living expenses, rather than home repair work.
However, the major point to be made is that these 2.8m people own outright a significant asset – the actual property – and therefore, with the right advice, they might well be able to release the equity to secure and modernise the home thus ensuring they can stay in their place for as long as necessary. Clearly, if people who are ‘cash poor’ want to remain living where they are rather than downsizing or moving into care homes they are going to need a healthy sum to carry out the ongoing work that might be necessary.
The important thing is we do have an available equity release solution which could help solve these issues and provide the security these people are looking for. It will not be the right option for everyone but for some it could be just what they are looking for. Again, it is up to us as an industry to get this message out to these consumers, to allay any fears and to spell out the options, benefits and responsibilities should they go down the equity release route. The very least we should be doing is putting the solution in front of them and just by doing this we can help some pensioners fulfil their wishes rather than having them move at a time when most people would rather stay put.
Chris Prior is manager, sales and distribution at Bridgewater Equity Release