Scots Slow To Unlock Housing Wealth Potential

by Stuart Milne

Friday, July 14th, 2017

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SCOTLAND is lagging behind in seizing opportunities to unlock housing wealth through equity release, according to a leading property expert.

Plans for equity release in Scotland, where homeowners can cash in, tax free, on the value of their properties while maintaining ownership, have increased almost 40 per cent in Q1 year-on-year[1].

But the growth in Scotland pales in comparison with the rest of the UK, where burgeoning demand from older homeowners has seen equity release become increasingly recognised as a ‘mainstream’ tool to support all forms of retirement financial planning.

Combined, the equity release plans in Scotland equate to a total value of £21.6m, with an average payout of £42,379 – or the equivalent of £240,000 a day over the first three months of 2017.

But in the South East of England (excluding London), there were 2431 plans taken out in Q1 2017, an 88% jump. The total lending value was £204.4m with an average release value of £84,102.

The North West of England also showed a similar spike in interest with 33% increase in new plans, worth £38.9m in total with an average release value of £56,221.

Peter Boyd, Managing Director of Boyd Legal, Scotland’s leading equity release legal advice specialist, said the record figures combine with the fact that equity release is the fastest growing segment of the mortgage market in terms of customer numbers.

He said: “Equity release is on the rise. It is a real alternative for older people who are seeing savings squeezed by historically low interest rates.

“The changes made through tougher regulation to vastly improve consumer safeguards – which have elevated the sector out of the bad reputation that it previously had – has seen equity release now become a mainstream retirement product for older homeowners.

“We are seeing a crucial mindset switch. There is a realisation that anyone who owns a home bought with a mortgage has effectively been ‘saving’ throughout their lives.

“People are now understanding that the house you live in is a potential source of income in older life because your mortgage has been invested in bricks and mortar – and that wealth can be unlocked.

“However, in Scotland, we are lagging behind significantly is seeing the potential of equity release.

“But I’m convinced that will change, particularly as many families increasingly turn to equity release as a vehicle to get their children or grandchildren on to the property ladder, as well as paying down their own mortgage debts.”

The average equity release customer in Scotland in 2016 is aged 71. Research by Key Retirement also found Scots are also using equity release cash to fund home and garden improvements and to clear debts on loans and credit cards.

Across the UK there were 8604 new equity release plans in the first quarter of this year – representing a total value of £663.3million.

However, out of the 12 regions in the UK, Scotland was ninth only both in terms of the number of equity release plans and the value of these plans in Q1 2017. Only Wales, North and Northern Ireland lagged behind Scotland in both categories.

Boyd Legal provide equity release advice to clients at five offices throughout Scotland. Their specialised team delivers that expertise to intermediaries throughout the UK.  More on Boyd Legal, please visit: www.boydsolicitors.com

Boyd Legal began life as Boyd Property in 2004 – primarily as estate and letting agents – but rebranded as a full service firm, Boyd Legal, and moved into new showpiece offices in Edinburgh’s Queensferry Street in 2015.

[1] https://www.keyretirement.co.uk/market-monitor/

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