With regulation of the home reversion market set to start in 2007, Peter Couch, managing director at Bridgewater Equity Release, said new entrants into the market, coupled with improving broker knowledge, would help improve the sector. He said: “The industry needs to better understand the habits of people in retirement. It is likely that people retiring will spend more money in the first few years after they retire, and then slow down their spending. An increasing number of people will have to use their home to supplement their retirement.”
He added that regulation of home reversion would have an impact on the market, but stated the transition should be smooth. “Under current MCOB eight rules, if advising in the equity release market you must consider home reversion. In the current market most intermediaries dismiss it, but Financial Services Authority (FSA) regulation will call for more emphasis from advisers to understand home reversion because it will be recommended more often. Currently about one-in-20 lifetime mortgages are home reversion, but over the years I can see this increasing to one-in-five. Many people will consider home reversion as they get older because of the certainty it provides.”
The FSA began regulating lifetime mortgages on ‘Mortgage Day’, when it moved equity release into its regulatory scope.
Jon King, chairman of Safe Home Income Plans (SHIP) added that regulation of the home reversion market in 2007 should increase confidence and volumes of business in the sector. He said: “Home reversion is a growing sector and SHIP figures reveal a growing number of people are looking at the equity release market. I would expect the volumes of home reversion plans being sold to increase.”
He added that regulation of the market in 2007 should increase confidence and volumes of business in the sector.
