What’s more, the often monumental cost of this housing is causing a widespread feeling of bitterness and betrayal amongst the elderly. With increasing pressures on government from an ageing society, dwindling grants and the costs to local authorities for care costs, it is entirely possible that releasing equity could be used far more to help retirees pay for care in their own home and modify their current property to suit their needs thereby giving them a greater degree of control.
In the long-term, the Government must overhaul the difficulties housing providers face in building new, purpose-built properties for those who require care and attempt to soothe the stigma attached to such housing; but, in the short-term, we must enable older homeowners more access to their housing wealth in order to facilitate adequate at home care provision. If this is achieved, the strain on care homes can be eased and allow those who could stay and be cared for in their own home the option to do so.
Supply and stigma
Most people do not want to think about ever having to move into a care home, but many of us will be forced into this consideration in later life. Unfortunately, the failings of local Councils, unhelpful planning rules and the specialist requirements for building such housing has caused, in part at least, many elderly people who would actually benefit from moving into a residential care home to become trapped in their homes, which no longer meet their needs.
The UK also has a severe lack of suitable retirement housing - just 1% of Britons aged over 60 live in sheltered retirement housing, compared with 17% in the US and 13% in Australia and New Zealand. The ingrained stigma surrounding retirement housing and institutional care facilities is understandably contributing to the desire many have for the preference of home care. It is with this at home care provision where equity release and related products could serve an invaluable role.
At present, however, the understanding of the role of equity release alongside the complicated benefit rules and the available products structured for this use is rather minimal. Our customers at Bower Retirement rarely state care costs as a reason they access their housing wealth. There is, therefore, much scope for improvement in the equity release industry for helping homeowners convert their housing wealth into funds to pay for at home care or help in modifying their home to facilitate a more comfortable life.
In conjunction with benefits where appropriate, converting housing wealth can help those who need care at home pay for home modifications, professional assistance and myriad other needs and eventualities. What's more, the support for at home care provision compared to institutional care is stark, the vast majority of people prefer at home care. Although some people will have severe care needs that can only be met in an institutional setting, for those who have only moderate or low level care needs – i.e. the vast majority of people – the use of equity release to adapt the walls around them to their changing needs and requirements, and supply them with the funds to pay for the assistance they need could become extremely helpful not only to the individual but to the state. The contribution of housing wealth to pay for at home care will also allow institutional care facilitates to focus their attention on those with more severe needs and, one hopes, improve their standards across the board.
Using equity release to meet moderate and low level care needs is currently a peripheral issue in the industry, but with a growing elderly population who will need to have more care provided - the number of older people with moderate disabilities is expected to rise 32% from 2010-2022 - and the current stigma and supply side issues with suitable care housing, equity release can be utilised as a way of contributing to the funding for the at home care that retired homeowners both want and need.
Until the ingrained stigma attached to residential care homes is overturned (something that will take many years), the lifetime mortgage can and will most likely be used by more people to contribute to costs for a variety of at home care. What's more, the social value of the independence that this can facilitate must not be overlooked. Providing the elderly with a vehicle for providing for themselves will re-establish the feeling of worth and freedom that many elderly homeowners feel slips away from them in later life.
Equity release is becoming a more diverse industry that can meet the needs of a wide-ranging spectrum of people who have an equally wide-ranging array of needs. Providers must now prepare to design products that can better facilitate this unavoidable future and advisers must prepare to add another level of knowledge to their repertoire.
