A new equity release scheme has been launched, to enable asset rich but cash poor pensioners to pay for care and stay in their own homes for longer.
The Joseph Rowntree Foundation and retirement solutions provider Just Retirement have joined forces to launch the new pilot scheme, which they hope will help to make older people's lives easier by boosting their income.
After carrying out a report to investigate whether or not equity release can improve retirees' quality of life, the JRF devised the scheme, which will operate in conjunction with local authorities, the equity release industry, and voluntary bodies, providing an equity release advice service to older homeowners.
The service will also provide access to a new equity release product, the Home Cash Plan, which will be available through Just Retirement and is endorsed by the equity release trade body SHIP (Safe Home Income Plans).
It will allow homeowners to release small amounts of equity from their homes to help them to meet their living costs without interfering with the benefits they are entitled to.
The JRF has launched the scheme in response to statistics which say that around a million older UK homeowners have at least £100,000 in housing equity, yet qualify for means-tested benefits because they have such small incomes.
Commenting on the new scheme, Julia Unwin, chief executive of the Joseph Rowntree Foundation, said: "Our aim is to find a practical solution to enable these people to release the equity in their homes, without jeopardising their pension credit, so they can stay at home for longer."
Rachel Terry, one of the report's authors, said: "Research tells us that older home-owners may only need an extra £20 or £30 a week to pay for additional help at home and improve their quality of life, but many can’t afford this on their small incomes."
Andrea Rozario, director general of SHIP, said of the new scheme: "This pilot of what is an innovative concept and a unique new equity release product bodes well for the development of the sector in 2010."
She added that "The equity release sector plays a vital role in improving the standard of living for older consumers and those taking part in this pilot will - we believe - gain the benefit of being able to stay in their homes longer."
The scheme will initially be piloting in three local authorities – the London boroughs of Islington, and Kensington and Chelsea, and Maidstone Borough Council.
© Fair Investment Company Ltd
Equity release is not right for everyone - Click here for equity release quotes and advice »