Key – Later Life Lending: the solution for the financial impact of 2020?

By 30th March 2021Mortgages

Looking back at the past year, it’s difficult to believe that we`ve now spent an entire 12 months distanced from friends, family, colleagues and clients. I for one can’t begin to describe the challenges I’ve experienced and witnessed in the later life advising market, but they’ve not been isolated from positivity- we are filled with renewed hope as our world `Zooms` through the vaccine roll out and into the throes of a safe lockdown exit.

Among all of the difficulties presented by the pandemic and it`s repercussions, it can be difficult not to see the positives, and indeed the opportunities that are available to us in the later life market.

Stamp duty holiday

In early 2020, our nation faced its first national lockdown as a response to coronavirus pandemic. As a result, restrictions on property purchasing were also implemented, causing a strong decline in property values and transactions. In July 2020 the government’s announcement of a stamp duty tax holiday to aid in combatting the challenges faced by the housing market, turned things around.

Rishi Sunak raised the taxable property value to over £500,000 and allowed many the opportunity to purchase property while incurring substantially less, or indeed no tax charges while purchasing property.

With many seizing the opportunity to purchase new homes and first time buyers able to buy houses of more value, the demand for cash to afford the deposits and house purchase expenses has only grown, but where are these buyers seeking financial support?

We saw Key’s Market Monitor report* that 2020 saw gifting make up 27% of people using equity release to gift cash to family members. Of that gifting total, 43% was allocated towards helping younger family members with getting onto the property ladder via generating cash for a deposit.

The impact of furlough

It isn’t just the stamp duty holiday either, many have faced the impact of the crisis financially through being placed on furlough or indeed their own businesses have suffered through forced closures. Supporting business through gifting from older family members (the bank of mum and dad, or indeed grandma and grandad) may have only accounted for 1% of gifting done in 2020, but with an average gift of £36,326 gifted* for this reason, it is clear to see the difficulties faced by those running their own business in the last year.  

Furthermore, the data shows that 26% was allocated to early inheritance gifting, and a further 8% to debt repayment. Early inheritance gifting made up a significant portion of gifting in 2020, and there were various uses of the gifting. Indeed, given the large numbers of people on reduced incomes across the last 12 months, daily expenses may have taken up large amounts of this cash.

Gifting opportunities

As professional Advisers who encounter those seeking mortgages (and therefore deposits in most cases) or who have clients looking to repay debts, the role of gifting from equity release eligible older clients should not be ignored, whether you hold the qualifications and permissions to advise on equity release or not, the opportunity still remains.

If you’re interested in this option for your clients, have a chat with the team at Key Partnerships to see how we could help you, help your clients.

Download the full Market Monitor report here >>

Email us now at refer@keypartnerships.co.uk or give us a call on 0800 138 1663

*Key’s Market Monitor FY 2020

Craig Kerrigan

Craig Kerrigan

National Account Manager for Key