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The Actuary The magazine of the Institute & Faculty of Actuaries

Government should take interest in equity release

A new report published in July by the Social Market Foundation (SMF) proposes that the government work with the financial services industry to provide a ‘Home-Saver’ product, which would allow people to easily release some of the capital from their homes without having to sell.

‘This initiative is needed because there is a growing class of asset-rich homeowners who don’t want to sink into poverty when they retire or if they have an accident or chronic illness that stops them working full-time. These people are not well served either by the current confusion of equity release products or by government’, said the SMF.

The report, ‘Home Made Money: A coproduction approach to equity release’, claims that government policy over the past two decades has led to an ever-higher concentration of the nation’s wealth being invested in bricks and mortar, without sufficient consideration of supporting homeowners’ income, particularly during difficult times.

Unlike other such schemes currently on the market, this proposed new product would be simple and available to those people living in poorer areas with lower house values who are not at present eligible for suitable commercial products.

Norwich Union reacted positively: ‘Government can play an important role in making it easier for people to make use of the wealth tied up in their homes, and the idea of a government- backed equity release scheme is one to explore in more detail.… We hope the government responds to each of the recommendations made by SMF.’

For more, visit www.smf.co.uk.