Speaking at a parliamentary reception hosted by Heather Wheeler MP on behalf of the Equity Release Council earlier this week, Lord Lipsey told an audience of industry representatives, parliamentarians, think tanks, charities and business associations that equity release can help many older homeowners to avoid a need to downsize or sell by allowing them to pay for care in the comfort of their homes.
As well as highlighting the benefits of growing competition and increasing funding supplies within the equity release industry, the Labour peer – who is also a member of The Council’s Advisory board – called for a renewed focus on information and guidance on the issue of long term care, so people can prepare in advance and make the best use of their financial assets to ease their quality of life.
Lipsey said: “There is a general consensus on the Care Bill that the costs of long term care have to be met in partnership with both the state and individuals contributing. In this age of austerity, free care for all is simply unaffordable.
“But many people have a substantial investment they can draw on in later life through the property they own – far greater than the value of their savings.
“Equity release has a major role to play for the many people in need of care who would dearly love to continue living in their own homes.
“It offers tremendous flexibility in the form of readily available cash to spend as you want, for example, on visiting support or home improvements to give an extra degree of comfort.
“In this new world of care and retirement planning, equity release can provide extra income in the comfort of your own home while also allowing people to preserve an inheritance for their families.
“Increasing the supply of funding and range of available products is helping to improve rates and move towards a position where older people can pay for the care they need without having to worry about the associated costs.
“At the same time, we must focus on providing the right information to the public about the cost of care and where they can look to for support.
“Many still expect that the state will pay for them in full, and it is vital we educate people on this issue and encourage them to seek proper advice to find the best solution to their needs.”
Nigel Waterson, chairman of the Equity Release Council, added: “2013 has been a milestone year for the equity release sector: as well as welcoming the first new provider since June 2010 we have seen a surge of interest in secure borrowing through equity release products that leaves us on the point of reaching and exceeding the levels of 2008.
“With the next election less than 18 months away, a growing, innovative and competitive equity release market offers a solution to the most intractable challenges for policymakers – care in older age and disappointing incomes in retirement to name just two.
“Higher taxation or increased government borrowing are not the only solutions, when many over-55s already have the means to improve their financial position and quality of life through the value of the property they own.”