Equity release is a “financial tsunami” that advisers must be more aware of, Just Retirement has sad.
‘The role of housing equity in retirement planning’, a report by retirement specialist Just Retirement, predicts a rise in the number of people using equity release and urges the government to promote understanding and advice.
“This market is a financial tsunami,” said Stephen Lowe, group external affairs and customer insight director at Just Retirement. “This isn’t just a poor man’s market anymore. The baby boomers are the ones that are really saying they’re going to use it.”
Just Retirement’s report urged government policy to lead the way in encouraging people to consider equity release, saying 60% of respondents wanted reassurance that the products are regulated by the government.
The research, which surveyed 1,000 people, added the equity release industry should do more to eliminate misconceptions around the product, including exploring different names for it.
Money Management’s report on equity release showed only nine providers currently operate in the market, although demand is on the rise.
Just Retirement said perceptions of equity release are poor, with 89% of respondents unable to spontaneously name a provider.
The primary reason for people considering equity release, at 17%, was needing extra income to get by in retirement. An average of £283 per month was identified by respondents for topping up their retirement income to an acceptable level.
“Retirement planning is going to have to include housing wealth for the next generation of retirees,” said Lowe, adding that advisers must consider all of a client’s assets when advising on retirement income.
The report said the government should establish an industry-wide group to increase the efficiency of equity release and ensure homeowners can access high-quality advice to best use their resources.
“Government needs to have policies to help there be advice at the time of transactions,” Lowe said.
There should additionally be tax incentives in place to encourage people to set aside some housing equity to fund their long-term care, the report added.