The home reversion market, which currently only involves six niche lenders, is set to expand, but at a cautious rate, as it is expected to take up to three years before the legislation becomes law.
A straw poll of major lenders conducted by Mortgage Introducer, which included Abbey, Halifax, HSBC, BM Solutions, Mortgage Express and Skipton Building Society revealed a ‘wait and see’ attitude.
However, as equity release will be regulated from 31 October this year, a potential three-year delay in regulation of home reversion schemes could create an uneven playing field, with advisers favouring the regulated over unregulated products.
Home reversion schemes involve a consumer selling all or part of a property in return for a lump sum or income, which is redeemed by the lender when the property is sold. Borrowers remain in the property rent-free until they die.
Matt Grayson, PR manager at BM Solutions, commented: “Many major lenders will be waiting for the market to mature in order to assess the viability, regardless of regulation.”
Jennifer Holloway, head of media relations at Skipton Building Society, said the Society had no plans to enter the market over the next three years. “But this is something we always keep a close eye on,” she said.
