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Increased use of equity release for purchase will be lasting legacy of stamp duty holiday

Stuart Wilson

December 23, 2021

Stuart Wilson more2life vulnerability in a digital age

Stuart Wilson is corporate marketing director of more2life

Though the stamp duty holiday concluded at the end of Q3, the market will continue to feel its impact long into the new year and beyond.

Much of the spotlight thus far has been on how the holiday has helped younger buyers and those with smaller savings to take their first step onto the property ladder, and rightly so – this year is set to be the strongest for purchase activity for 15 years, according to UK Finance.

However, one of the tax break’s healthiest legacies has been the increased awareness around the ability to use equity release to boost your buying power when purchasing a new home.

Equity release has traditionally been viewed and used as a means to fund holidays, home improvements and the like, but the tide is changing.

The rush to complete purchases before the stamp duty tax break drew to a close forced older homebuyers to explore other avenues to fund their ventures and this often led them to equity release.

At more2life alone, we have seen a 116% year on year increase in the number of people using equity release for property purchase. Over the same period (January to August 2021 versus. January to August 2020), the team also saw a 113% increase in the amount of equity used to fund property purchases.

Figures from other lenders tell much the same story. As such, Will Hale, chief executive at Key, has tipped homeowners will release a record of over £4bn in equity this year, potentially even touching £4.5bn.

Data from both more2life and wider industry bodies suggests that this is no flash in the pan – increased use of equity release for property purchase will be a lasting legacy of the stamp duty holiday. In October, over-55s continued to drive a considerable proportion of purchase activity and the later life lending sector remained busy.

Despite this, using equity release to fund a property purchase still remains an under-used benefit of lifetime mortgages, and advisers must renew their focus on client education if we are to change this.

There are many reasons why a homeowner might want to move besides the tax break, perhaps to move closer to amenities or benefit from a property adapted to their level of mobility for example, so it’s vital that they are given as much support as possible in making these dreams a reality.

Advisers can play their part by exploring the range of uses of equity release during conversations with clients, while the industry as a whole can work to develop informative educational content to help support these conversations.


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