A call for concerted action by the mortgage industry, government and regulators in the later life lending market to help the UK’s ageing population, has come from a new report.   

The older generation faces major challenges such as retirement income shortfalls and funding social care costs, says the study, called Later Life Lending: Great Expectations, commissioned by the Equity Release Council.  

The report sets out 21 recommendations across four key areas – spanning government policy, regulation, industry and consumer education – for later life lending products to support retirement planning.  

The study broadly covers:

• A call for government reform in areas such as inheritance tax and benefit rules that prevent people from taking advantage of their assets. It calls for property to be integrated within the Money and Pension Service’s guidance guarantee  
• It argues in favour of addressing the regulatory divide and differing continuing professional development requirements, which separate the equity release and mortgage markets and restricts the recognition of property within wealth planning   
• The report advocates that updated adviser exams based on new approved examination standards and for greater collaboration between trade and professional bodies to create stronger referral processes between later life mortgage advisers and other specialist financial advisers. It challenges the Equity Release Council and product providers to build on the standards and flexibilities underpinning modern equity release products, while taking inspiration from open banking to make better use of technology  
• It outlines the case for cross-sector communications to help consumers make informed decisions about the role of property wealth and later life lending products in their retirement plans  

The report follows a milestone year when a record 93,421 homeowners aged 55 or older used new or existing lifetime mortgages to withdraw £6.2bn of property wealth in 2022. The value of UK homes is estimated at £5trn.  

Author of the report and About Consulting Group director Jon Dunckley says: “Despite seeing major progress on product innovation and advice standards during my 25 years in financial services, many consumers and their advisers still have their eyes closed to the potential of property wealth and later life lending products to improve their life experiences.  

“There is huge scope for property wealth to offer real solutions to today’s financial challenges on an individual and societal level. For that to happen we need to develop a more joined-up approach, from government to regulators and advisers.”  

Legal & General Home Finance chief executive Craig Brown adds: “We welcome the [report’s] recommendations, particularly about the need to challenge people’s understanding of the role property wealth can play in financial planning. 

 “As an industry, we need to challenge misconceptions around the use of property wealth, particularly when it comes to intergenerational gifting, which is already a popular use of equity release.  

“With people passing on traditional inheritances later, and with young people needing additional financial support and help onto the housing ladder, we anticipate more people turning to their property wealth to provide a ‘living inheritance’. 

 “We have also seen homeowners use equity from their property for vital home renovations, particularly energy efficiency improvements, such as replacing a boiler or installing insulation, which can increase the longevity of the property, as well as making it more comfortable to live in. 

Equity Release Council chair David Burrowes points out: “In the twenty years since residential and lifetime mortgages became formally regulated, property wealth has emerged as a major component of modern retirement planning.   

“This report provides essential, and most importantly, objective clarity on the challenges to build on the flexibility and product innovation that has emerged over the last decade.  

“The council is dedicated to working with members, industry, policymakers and the regulator on coherent, consumer-focused solutions so the later life lending market can fulfil its potential.”  

Canada Life UK head of marketing communications Alice Watson adds: “A lack of awareness of the equity release market has resulted in consumers considering their wealth in siloes.   

“Importantly, property wealth should be thought of alongside pensions and other assets to create holistic retirement plans.  

“Thanks to a combination of the interest-only mortgage time bomb, limited pension adequacy, pension freedoms and inheritance tax rules changing, notwithstanding a cost-of-living crisis, equity release will undoubtedly be a key component of many retirement plans in years to come – due to the fact it can provide both certainty and flexibility.”