The report by the Department of Communities and Local Government (DCLG) entitled Affordability and the Supply of Housing also recommended that the government should become more involved in the sector.
It stated: ‘Many equity release schemes offer poor terms. We believe that the government should work with financial services providers to develop more appropriate schemes which enable older people to realise some of the capital tied up in their homes.’
However, the equity release industry has reacted angrily to the statement and the lack of clarity in the phrase ‘poor terms’.
Stuart Wilson, managing director of Equity Release Advisory Service, commented: “I think this is being dictated by a hidden agenda. The government has realised that its pensions strategy has gone horribly wrong and it is looking to the equity release industry to get them out of it. ‘Poor terms’ is such a wide brush as you don’t know what it is comparing it to.”
There was also confusion over how the government could get involved in the equity release and lifetime industry, and a mixed reaction as to whether it should play a greater role.
Wilson added: “Instead of taking pot-shots at equity release, I would like to see the government involved so as to give the product credibility. They should also work with the private sector to develop better products which will help more people.”
However, Mark Neal, managing director of Economic Lifestyle, was less enthused about the prospect of government intervention.
He explained: “I don’t see how the government could get involved. The pay-outs are based on life-expectancy and the money released from the home is tax-free so I can’t see how the government could assist.”
