Retirees are releasing more money from their properties than ever before, according to the Equity Release Council.
Since 2011, the market for equity release in England and Wales has grown 10% year-on-year. In Scotland 2013, it was a whopping 37% increase. Overall UK equity release lending to older homeowners is around £1 billion as over-55s seek to improve their retirement income, reduce other debts or avoid having to move to a smaller property. In conversations across the country, lawyers tell me they often receive a ‘double conveyancing instruction’ as part of the money is sometimes used to help a family member get on the property ladder.
With many people in the UK retiring asset-rich but cash-poor, tempting them to use the value of their property to supplement their income through specialist equity release lenders has proved an easy sell. Alternative lending options can be expensive, with lenders tightening remortgaging criteria for older borrowers.
The idea behind equity release schemes is that people borrow against the value of their houses. Usually the loan is not paid back until they sell the house or die, although a minority make interest payments. If you happen to specialise in wills, it’s also a perfect time to sell that legal service as well.
This opportunity has not been embraced by many conveyancing solicitors, many of whom are unfamiliar with the conveyancing process involved. That’s unfortunate, since It is relatively straight forward.
Equity release has come a long way since the early 1990s when bad press scared lawyers away from taking on such work for fear of potential claims that the borrower was under duress or did not understand the nature of the loan. The image problem persists although 30,000 equity release conveyancing transactions were ‘up for grab’ last year. An additional benefit is that such conveyancing does not involve the emotional strains of a buyer and seller. Furthermore there is normally no other lawyer involved and certainly no estate agent.
Lenders who operate in this area include Aviva Equity Release, Skipton Building Society and Newcastle Building Society. These lenders do not operate particularly restive approach to their conveyancing panel.Newcastle, for example, published the following criteria for eligibility for its conveyancing panel:
• Conveyancing firms with 2 or more partners may apply to be considered for inclusion on the Society’s panel of Solicitors.
• An application form needs to be completed and returned with copies of the firm’s current indemnity insurance, conveyancer’s practising certificates and certificate of incorporation (if applicable).
• Copies of the application form can be obtained from, Mortgage Operations Department, Newcastle Building Society, Portland House, New Bridge Street, Newcastle upon Tyne, NE1 8AL
In a move that I assume is directly related to the increase volume of transactions Lexsure has recently been asked by a number of firms to build a specific checklist within COMPLETIONmonitor specifically for Equity Release. Any lawyers wishing to see a demo of the checklist which takes into account individual lender requirements for Equity Release should contact me directly.
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