The Council of Mortgage Lenders (CML) has welcomed the recognition in the Turner report on pensions that housing assets are important in the context of retirement income, but has casdt doubts over certain elements.
The CML would agree with the report that housing assets should not be a total substitute for earnings-related pensions. But more developed ideas about exactly what part housing equity could or should play in releasing retirement income would have been welcome.
In particular, the report has failed to make recommendations about how the tax and benefits regime could be made fairer, so as not to penalise those who release housing equity. It is particularly iniquitous that people who release equity to fund necessary home improvements, that until recently would have been funded under local authority grants, can end up being penalised for doing so in terms of their treatment for benefits purposes.
Commenting on the report Laurence Baxter, CML senior policy adviser (and until recently senior policy adviser at Which?), said:
"The Turner report glosses over the role of housing equity in funding retirement income. This is a wasted opportunity, as there is a great deal that could be done to ensure that equity release becomes a more mainstream part of the retirement income mix. With a current market size of only £4.6 billion, but unmortgaged equity of £1.15 trillion, the potential for equity release in retirement income is huge but untapped."
