Specialist providers catering for the over-50s has welcomed a move by high-end estate agency Knight Frank to move into equity release.
Commenting on the move, Ashley Shepherd - managing director of insurance firm Over50choices - says: “Today's equity release is not the same product as the one in the 1980's - it's now highly regulated by the Financial Conduct Authority and has far more guarantees than its predecessor. It can be an excellent option for baby boomers who want to see their children and grandchildren have a better life.”
And he adds: “Staying put in a home that you love and seeing your grandchildren buy their first home - or your children move up the property ladder - has to be better than not seeing them inherit the cash tied up in your property once you've passed.”
Meanwhile Chris Knight, chief executive of Legal & General Retirement, has also backed the estate agency’s diversification.
“It’s clear evidence that releasing housing equity is no longer seen as a last resort; it is part of the mainstream conversation for supporting greater financial security in retirement. Equity release was the fastest growing part of the mortgage market last year and accounted for a third of all mortgages taken out by Britain’s over-55s” explains Knight.
“More competition can only be good for both the sector and customers, who will benefit from greater choice when it comes to accessing the pensions they never knew they had. The entry of another well-known name in the housing market will also encourage innovation from existing providers to develop products that offer yet more flexibility and value for customers.”
However, agents have been muted in their response to Knight Frank’s initiative, which could be seen as accepting that downsizing - through selling and buying in the traditional way - is no longer the driving force in the housing market that it once was.
Knight Frank earlier this week launched a suite of products designed for older homeowners, including equity release and retirement interest-only mortgages.
“The market for equity release is growing quickly. Over 55s hold the majority of all property wealth in the UK, around 75 per cent” says David Forsdyke of Knight Frank Finance.
“We are seeing older people look to release equity from their primary residence for a number of reasons, including helping children financially, making home improvements and enhancing their quality of living, or to take the holiday of a lifetime. At the same time, we have seen a steady decline in pensions and savings, with retired people in the UK often finding themselves asset rich, but cash poor” he adds.
Figures produced by Knight Frank suggest that the number of people aged over-65 living in the UK is forecast to increase by 20 per cent to 14.4m by 2027. The number of those aged 90-plus is expected to rise at an even faster rate, by a third, to more than 750,000 people over the same time.
Knight Frank’s calculations suggest a need for retirement living properties for 3.6m people to house those aged over 65 that would consider downsizing. This is based on the assumption that 25 per cent of over-65s in their existing homes would consider downsizing into some form of specialist retirement living.