The hard hitting implications of today’s first budget announced by Chancellor George Osborne on behalf of the Coalition Government are clear for all to see, we were warned what to expect and the Chancellor has delivered.
But there are some areas of the budget that could stand the equity release sector in good stead for the future, Andrea Rozario, Director of Safe Home Income Plans (SHIP), the UKs trade body for equity release product suppliers believes that to be the case and said;
“While the emergency budget did not specifically mention equity release, it did announce a number of measures that have the potential to significantly impact the sector. Chief amongst these are the increase in VAT from 17.5% to 20% and the review of public sector pensions.
Over 55s in the UK often have a relatively fixed income with spending weighted towards VAT-able products and significant equity in their homes. The changes outlined in the budget mean that they will suffer from VAT increases eating into their income and then their families will be hit by death duties when they receive their inheritance. In addition, those people who have been relying on a comfortable public sector pension when they retire could face a nasty shock and will need to seek additional sources of retirement funding.
Equity release would seem the logical answer to many of these issues and we believe that the Government changes will lead to more and more people considering equity release as an integral part of their pension planning.””
Wishful thinking or just plain common sense?
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