Controversial proposal would result in families using some of children’s inheritance as parents live longer
Theresa May’s policy chief has suggested that people with valuable homes who face high social care costs in old age should downsize or re-mortgage to cover their bills, the Observer can reveal.
Director of policy John Godfrey has suggested that over the next 10 years the solution to the social care crisis lies in people selling up or releasing some of the equity in their property.
“On a 10-year view … equity release is going to be hugely important, because if you look at the amount of housing equity across the UK that is owned by people of post-retirement age, that is really where an awful lot of the money sits at the moment,” Godfrey told an independent commission last year. “Can people either downshift or liberate some of that money through equity release to fund their living costs?”
One in 10 people end up paying more than £100,000 in care costs in old age, research has shown. Equity release involves borrowing against the value of a home or selling all or part of it for a lump sum or a monthly income. Godfrey, who was a special adviser to Douglas Hurd in Margaret Thatcher’s administration, added that he believed the government should encourage people to sell their homes to release cash through the building of suitable retirement homes.
“As far as downshifting is concerned, you move into another area of policy altogether, which is the need to build more housing to give people a choice of the right sort of home.”