Equity Release  

Tory social care plans could boost equity release

Tory social care plans could boost equity release

Conservative plans for the social care sector could drive more people towards equity release, it has been claimed.

But whether this happens or not depends on the details of how the proposals are implemented.

Under the proposal, published in the Conservative manifesto last week, the threshold for free social care will increase from £23,250 to £100,000 but the value of a property will be included in the calculation for people who need care in their own homes.

However, those in care will be able to keep their homes until after they die, when the home will be sold to recover the costs, with £100,000 passed on to loved ones, guaranteed.

Alice Watson, head of marketing at equity release provider Retirement Advantage, said: “The unanswered question at the moment is how will this work in practice? If the Conservatives encourage more people to turn to the open market then equity release providers could benefit.

“Or, we might see some sort of Government-backed scheme developed, perhaps akin to the Student Loans service.

“If that is the case, then it will be a case of assessing affordability, flexibility and ease of use of any such product or products against those already available.

“What is clear is that the Conservative manifesto plans do recognise the wider need for retirees to consider their property alongside all their other assets and income, which is a good thing.”

If the Conservatives win next month’s election it will mean the death of the planned cap on social care.

This policy, which was due to come into effect in 2020, would have capped the cost of care at £72,000 with anything above that paid for by local councils.

Stuart Wilson, channel marketing director at equity release provider More 2 Life, said the policy highlighted the benefits of equity release.

He said: ““This policy will certainly raise the profile of equity release and how it can be used to help with care costs into the spotlight.

“It has the potential to be another huge growth driver for the equity release industry, already the fastest growing mortgage finance sector.”

The equity release sector saw record annual growth in new customers and total lending in the first quarter of 2017, according to the Equity Release Council.

The total value of equity release lending in Q1 reached £697m, up by 77 per cent from £394m in Q1 2016.