Equity Release: Unlocking Home Wealth Responsibly

9 September, 2025 3 minutes reading time

Equity release continues to grow in popularity among older homeowners in the UK, driven by increasing property values and the desire for extra retirement income. This option allows homeowners, typically aged 55 and over, to access the equity in their home without moving. They can opt to receive a tax-free lump sum or regular income, depending on their property’s value.

This financial product acts as a lifeline for those who are “house rich but cash poor,” providing funds for various needs such as boosting retirement income, settling an existing mortgage, funding home improvements, or supporting family members. While it offers a helpful solution, it is a major financial decision that reduces the value of your estate. Therefore, seeking advice from qualified legal and financial professionals.

Understanding the Equity Release Council’s Standards 2.0

The Equity Release Council (ERC) plays a crucial role in regulating and safeguarding the equity release market. Its members, who comprise over 99% of the market, must follow a strict set of rules and a Code of Conduct. The recent introduction of Standards 2.0 marks a major step forward in consumer protection and transparency. These new standards, which came into effect in May 2025, aim to clarify the process, improve safety, and increase accessibility for consumers. The updates primarily address key consumer concerns, with two major changes leading this development.

The New Sixth Product Standard

One of the key updates in Standards 2.0 introduces a sixth product standard that addresses homeowners’ concerns about long-term care. Starting on 6th May 2025, lenders following Council rules will waive early repayment charges if a borrower moves permanently into long-term care. Importantly, this now includes both care home placements and informal arrangements with relatives, provided a medical practitioner’s certificate is submitted, which was not previously covered. This change offers peace of mind, helping families avoid unnecessary charges during often difficult times, both emotionally and financially.

The Consumer Charter

The ERC has introduced a new Consumer Charter alongside the new product standard. This document clearly outlines what customers can expect from an ERC member and is designed to be shared with them.

The charter is built around four key promises:

– Trusted insight, where advice will come from regulated and qualified professionals;

– Tailored advice, where recommendations are customised to your individual circumstances;

– Thorough support, ensuring you are supported throughout the decision-making process with comprehensive information; and

– Transparent communication, where all aspects of the process, including fees and charges, will be explained clearly and straightforwardly.

The Consumer Charter demonstrates the ERC’s commitment to providing a positive and secure experience for all customers, and its principles extend the values embedded in the new product standard.

Our Advice

These improvements mark a positive step for the equity release sector. Updated standards provide more flexibility and protection, particularly for individuals relocating to access care. The Consumer Charter boosts transparency and trust, helping you make informed decisions. However, the updates stress the importance of consulting an ERC member firm, which offers security through a “no negative equity guarantee.”

Equity release can seem like a simple solution. But awareness of potential downsides is essential. Hidden fees, rising interest rates, and impacts on inheritance are just a few things to consider. Seeking independent legal advice is also crucial to protect your interests and estate. Despite reforms, expert guidance remains vital for understanding the details, long-term implications, and suitability of products.

Consider talking with your family, as they might have some valuable insights to share. Also, for more details, advice, or a quote, feel free to contact us. We’re always here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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