Property Plan, the launch product announced this week by Retirement Plus, introduces a new approach in the equity release market, providing increased levels of value and flexibility for the consumer.
Based on joint property ownership, Property Plan offers competitive valuations and charges, as well as taking a flexible view of customers’ personal circumstances.
Property Plan differs from a home reversion product, in that it involves the company co-owning the property with the customer. Its key features, which detail some primary advantages over typical home reversion, include:
- Sum advanced based on full market value of property (compared to advances as low as 50% of valuation with some products)
- No early redemption charges
- Retirement Plus’s percentage share of property to grow at set rate (currently the equivalent of an annual rate of 5.5%)
- After five years any falls in property values to be shared proportionally between Retirement Plus and client
- No negative equity, no future claims against residents estate
- Ease of portability, including into sheltered accommodation
- Will not insist on property sale if resident goes into nursing home
- No linked product sales
Examples of the partnership approach are:
- Reasonable business use permitted, including lodgers and tenants
- If the homeowner increases value of property through investment, Retirement Plus will recalculate agreement accordingly
- Willing to assist with leasehold enfranchisement, repairs and improvements
- Property Plan allows the flexibility of three people to be party in the agreement
- Retirement Plus will also offer free legal advice on property issues
Retirement Plus, chief executive Duncan Young said: “This product represents a significant development in the market. Full property valuations, lifestyle flexibility and a lack of exit penalties should give consumers peace of mind at a time when this market is likely to expand dramatically.”
“The initial response we have had from intermediaries has been very encouraging,” Duncan continued, “when many retired people have considerable assets, but are struggling to meet their day to day expenses, it does seem sensible to find ways to unlock the value in their properties. For many people it also allows the chance to enjoy long awaited holidays, big ticket purchases such as a new car, or home improvements.”
The Property Plan will be available to men and women over 65. It will only be distributed through intermediaries, because of Retirement Plus’s insistence that the product should be bought with advice. Retirement Plus adheres to the principles of the SHIP scheme and is currently applying for SHIP membership.
