He could of course opt to be a cowardly turncoat like yours truly, switching allegiance and ticket money to a different team like Chesterfield, all set for promotion as champions of their division. But that’s another story.
The point in telling this tale is that working in equity release is rather like supporting your favourite football team. You often wonder when the results will come and when to blow the full-time whistle?
Ever since I began specialising in equity release eight years ago, every supporter and commentator, inside or outside the sector, boldly declared that equity release would be promoted to the league of the “next big thing”.
For a time it looked like such predictions would come true, as annual sales recorded by SHIP members climbed markedly from £572m in 2001 to over £1.1bn in consecutive years from 2003 to 2007, only to drop back every year since to last year’s lowly £803m.
You could of course attribute this decline in performance to the rising popularity of drawdown plans, whereby homeowners take only what is needed and when. Sensibly so, I should add. However, a look through SHIP’s statistics reveals that the actual number of new plans taken has similarly fallen for the third consecutive year, from the high point of 29,293 in 2007 to just 17,574 last year.
At the time of writing, SHIP has yet to release Q1 2011 sales figures, but I’ll stick my neck out in prophesising that 2011 will surpass 2010’s sales.
Of course besides our own reasonable growth, I have no hard evidence to justify this expectation, but anecdotal evidence from speaking with many of my peers across the country, indicates higher enquiry levels are being received, which should lead to increased sales.
So why, despite falling attendances and gate receipts, have I and many others, signalled their intentions of renewing their equity release season ticket for the second half of 2011 and beyond?
Quite simply, we believe it is only a matter of time before we enjoy the sort of growth experienced in the last decade by our buy-to-let mortgage brethren.
Providers such as Stonehaven, New Life, Partnership and More2Life believe it too, evidenced by their re-entry or announcements on product development. Others like Bridgewater and LV are ramping up spending budgets in supporting advisers with marketing workshops.
Every single demographic about our ageing population, every single news item about our underfunded pensions and every single political manoeuvre to balance the country’s books, points in the same direction; untapped housing wealth.
I shan’t bore you in regurgitating the numbers because you will have heard this so many times before. Suffice to say that there is enough accessible cash tied up in the homes of the over 65s to clear the annual budget deficit twice over.
Makes you think, doesn’t it?
You certainly don’t need to be an economist to understand that the logical answer to so many of our national financial woes lies in humble bricks and mortar.
Successive governments have encouraged home ownership to a point of frenzy in the boom years, resulting in millions of homeowners experiencing their property doubling, trebling and even quadrupling or more in value.
In fact, the great majority could only have ever created such enormous wealth by investing in their own home. So the logical thing now is to turn their greatest asset into real money, paying for their lifestyle in their retirement years and care in later life.
The home is not sacrosanct and it does not belong to your kids. It’s yours, so manage it shrewdly and divest it, just like any other asset you own. That’s the message that the equity release protagonists amongst us must deliver to our clients, government, the media, and anyone else who will listen and benefit from such sage advice.
The outcome of the imminent report on care funding for the elderly will mark the beginning of an equity release renaissance as government recognises the vital role of housing equity in social provision and self-reliance.
As we approach the halfway mark in 2011, many specialist advisers will be reviewing the first half performance whilst casting an eye to the second half in expectation of a good result.
I suggest that you don’t leave your seat for a pee and the pie and Bovril queue for too long, as you could miss a few cracking opening goals in the second half.
Simon Chalk, later life planner at Later Living
