Making Use of Home Equity: Comparisons between Britain and New Zealand

Judith A. Davey

The convergence of certain well-known demographic, socio-economic and political trends in both Britain and New Zealand calls for a serious look at the concept of equity release.

These trends, which have serious implications for the wellbeing and living standards of older people, are (1) the ageing of the population, (2) the concentration of housing wealth in older age groups, (3) low incomes among older people, making them “asset rich and income poor”, and (4) a government policy stance aimed at reducing state support and encouraging self-reliance. Traditionally, assets such as houses have been used for transferring wealth through inheritance, but from a government’s perspective this equity is a resource that can be called on to reduce public expenditure through some form of equity release scheme.

This paper compares the characteristics and attitudes of older people who have taken up equity release schemes in Britain and New Zealand, and gives a short description of the schemes available in the two countries.

The paper concludes that although there have been many constraints on the uptake of such schemes, including the desire to bequeath and a mistrust of financial institutions, overall the prospects for commercial equity release schemes in both countries are good.