Home & Capital has introduced a tax-free variety of equity release called the Freedom Plan for homeo...
Home & Capital has introduced a tax-free variety of equity release called the Freedom Plan for homeowners aged 65 or over that allows individuals to stay in their home until death in exchange for sale of part or all of the property.
The Freedom Plan operates by matching retired homeowners wanting to increase their income, without taking on more debt, with investors willing to buy all or part of the equity in the property.
Managing director at H&C Graeme Marshall says new players are moving into the market but sometimes offer similar products which leave homeowners vulnerable to debt.
Equity release schemes could also include reversions which qualify for the Enterprise Investment Scheme and for Venture Capital Trusts, says Marshall, as well as increased opportunities for Housing Investment Trust and reversion possibilities through OEICs.
"The main barrier to collective investment vehicles investing in property is the double tax charge where investors are subject to capital gains tax when they sell their share in the vehicle, which itself is taxed on its investment gains," says Marshall.
"You only have to look at the huge amount of money invested in property through the Business Expansion Scheme to realise that some investors are heavily influenced by tax breaks.
"There needs to be a well-funded alternative for the elderly that could assist materially in meeting the burgeoning requirement of providing for the elderly, including their long-term care," adds Marshall.
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Industry Voice: For generations, life expectancy has been steadily increasing, with more and more people now likely to live to 100.