After holding relatively stable
in the first quarter of 2009, the UK’s equity release market became
another victim to the weak economic conditions in the second
quarter, with new business down 15.5 percent from the £275.7
million ($470 million) released in the first quarter of 2008 to
The number of people opting for equity release fell by an even
sharper 22 percent to 5,328 during the quarter.
The data is recorded by industry body Safe Home Income Plans (SHIP)
which represents more than 90 percent of the UK’s equity release
Second-quarter new business brought total equity released in the
first half of 2009 to £478 million, down 7.8 percent compared with
the first half of 2008.
On an annualised basis sales results from the first half of 2009
indicate that the equity release market new business for the full
year will fall below £1 billion for the first time since
Undeterred, SHIP continues to stress that equity release remains a
significantly underutilised of much needed additional pension
To this end SHIP has published the study Facing the Future,
Redefining Equity Release to Meet Today’s Social and Economic
Challenges undertaken on its behalf by professional services firm
Ernst & Young.
In particular, the study highlights that equity release should not
be viewed as a last resort and that people at or after retirement
are putting their property equity to a much wider set of uses than
before, including funding care, tax and estate planning and
enhancing their lifestyle.
“The people who could benefit from equity release and the products
and risks associated with them are not the same as they once were,”
said SHIP’s director general Andrea Rozario.
However, despite equity releases broadening appeal SHIP is
concerned that while the regulated equity release sector is doing
much to respond to emerging needs, there are some serious market
“At present, products available tend to be one size fits all
whereas people’s needs vary greatly,” commented Rozario.
To eliminate obstacles to development of the equity release market
SHIP has called on government, regulators, consumer bodies and
equity release industry members to enter into a comprehensive
debate on reform.
In particular, said Rozario, SHIP has called for the government to
launch a formal enquiry into the role which equity release could
play in helping to fund retirement funding needs.
SHIP’s appeal for reform and a formal government enquiry has
received strong backing from Baroness Patricia Hollis, a Labour
Party member of the House of Lords and main speaker at the launch
of SHIP’s study on 28 July.
“It is rare for the public and private interests to coincide as
they do with equity release,” said Hollis.
“Equity release meets a truly urgent social need in the most decent
way possible – government ministers should be singing its praises,
and making it a core part of retirement funding planning.”
She continued that alongside a formal review of the industry, a
government department should take responsibility for equity release
and make sure that it is a major player at the table.
“Equity release must be transformed from a distress option, and
taken mainstream,” stressed Hollis.
Underscoring Hollis’ strong support for development of the equity
release market, Rozario concluded: “The recent Social Care Green
Paper failed to recognise the £700 billion in unmortgaged housing
wealth currently held by the over 65s.”