The Government’s signalled intention to develop a code of practice for home equity release schemes has been welcomed by the industry’s leading provider of HER product, Sentinel.
Sentinel managing director Richard Coon said that the announcement funds would be made available in this week’s budget to enable the development of a code is extremely pleasing and is good news both for the industry and for older people.
Coon believes that a code of practice agreed to by the whole industry is the best way to cover matters such as disclosure of terms and conditions, risk management practices and recovery.
Home equity release is increasingly being viewed as a practical solution to the problem of financial resources for a sector of the growing numbers of New Zealanders who own their own homes, but who no longer have the income to maintain them or their standard of living.
Coon said home equity release had an important part to play in older kiwis’ well-being, it was vital that users had confidence in product providers and their integrity.
“The kinds of safety measures we would like to see put in place include a no-negative equity guarantee, ensuring the value of the home will never exceed the net sale proceeds of the property; guaranteed occupancy for life for those designated as nominated residents; no requirement for payment until the residents cease to occupy and the home is sold.
“We would also recommend that clients receive independent financial advice and be represented by their own independent lawyer,” Coon said.
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