Equity Release Schemes in the European Union

Equity Release Schemes (ERS) transform fixed assets in owner occupied dwellings into liquid assets for private pensions. They thus enable a homeowner to access the real or nominal wealth accumulated in the form of his or her home, while being able to continue to live in it. An illiquid asset becomes a source of liquidity, mainly for consumption purposes. There is a Sales Model ERS and a Loan Model ERS. Thirteen EU Member States have some form of ERS. The UK, Ireland and Spain have developed a significant ERS market with home reversion plans or reverse mortgages an established element of retirement planning . The sustained rise in house prices in many EU countries over the past decade, currently readjusting sharply downwards, has encouraged innovative lenders to take the risk of granting ERS to a steadily growing group of customers without a corresponding improvement in their income position. The main risk for providers is non-recovery of their capital outlay. Press coverage has characterised the risk for consumers as “the lifestyle dream that can turn into a nightmare”. This book, based on a report to the European Commission, gives sophisticated information on existing models, extent of national market developments, attitudes of consumers and suppliers, cultural barriers and the legal environment of ERS in all 27 EU Member States for an open discussion.