How coronavirus has changed the equity release landscape
29 July 2020
New reasons for equity release
Coronavirus has turned the world as we knew it upside down in so many ways. We’re seeing this in the equity release sector as much as anywhere else: there are some new reasons for equity release applications emerging as we adapt to life with coronavirus that we’d never come across before:
- Equity release for a garden office: It’s clear that working from home is going to continue to be the norm for lots of people for a while, and that many more will have a more blended working week, balancing some time in the office with some time working from home. If working from home has been a challenge for you or your adult children, equity release to finance a garden office could be the solution to help them separate their work and home lives – safely.
- Helping a family business: The economic downturn triggered by the coronavirus pandemic has created unique challenges for businesses in all sectors and of all shapes and sizes. We expect to see interest in equity release to hep support family businesses through these uniquely challenging times.
Equity release reasons on the rise
The ramifications of the coronavirus pandemic have made some of the enduring reasons for equity release more compelling:
- Home and garden improvements: An Englishman’s home has always been his castle, but during lockdown it may have felt a bit like a prison as well. And that’s encouraging many people to think about the extra space they’d ideally like or the new kitchen or bathroom they’d love. We also expect to see many more people aged 55 and over looking to release equity from their property to help their children with home improvements, especially with it likely that school children may not go back full time for a while yet.
- Help with regular bills: May people aged 55 and over have a variety of income streams, and some of these will have been impacted by the coronavirus restrictions, so we’re anticipating enquiries from people who need help making ends meet, at least for the time being.
- Helping friends and family: As well as helping children fund extensions to make their home more comfortable for their growing family or garden offices to enable them to work from home more effectively, we’re anticipating increased equity release applications to help relatives who are struggling because of reduced income, including those who have had to scale back their hours because they’ve had to home school their children, or been made redundant.
- Self-funding medical fees: Covid-19 obviously put a very real, immediate strain on the NHS, but there’s potentially a second wave building up, as all the people who have delayed going to the doctor for other medical reasons gain the confidence to make appointments. We’re again anticipating more enquiries from people who need medical treatment that can’t really wait until our stretched NHS can deliver it.
- Home care and nursing fees: We’re all aware of the challenges care homes have faced during the pandemic, and that’s leading to more people considering care at home as an alternative to residential care. Equity release can be a way of financing the care you or an elderly relative needs to enjoy continued independent living.
Equity release reasons going down
Some of the traditionally most-popular reasons for releasing property from equity may slip right down the list of triggers, potentially into next year:
- Dream holiday: Year after year, this has always been the second most common reason for equity release applications, but we suspect this will be on the back burner for most for some while. However, if it’s something you’d still like to achieve when the world can be your oyster once more, you could consider an equity release scheme with a drawdown option to give you the flexibility to fund your holiday of a lifetime at some point in the future.
- Moving to a nicer home: The jury’s out on this one. The real estate market has reopened, but with restrictions, which may impact on the buoyancy of the housing market. We suspect that unless there’s a compelling reason to move, many people will opt to stay put until it’s an easier operation and the impact on the housing market is clearer.
Coronavirus has impacted the equity release market in some predictable, and some novel, ways. But even if your retirement dreams may have changed – at least for the time being – equity release may still be a potential solution to help you realise them.