Norwich Union is considering launching a homereversion plan as it believes the product has benefits which a mortgage-based equity-release scheme cannot match.
Head of marketing Paul Stokes says the fundamental benefit of a home-reversion plan is that the borrower is able to leave a fixed legacy to their inheritants as they will always own a set part of their property regardless of fluctuations in house price.
But Stokes says it is clear that for the market to really take off, products need to become more transparent so that it is easy to make a comparison with a lifetime mortgage.
He says his main concern is the lack of regulation for the product. The Treasury is in the process of consul-ting on whether to include home reversion plans in the regulation of mortgages and Stokes is hoping that the answer will be yes.
If NU decides to enter the home reversion market, it says it would look to lead it. Stokes points out that home reversion plans are only offered by a series of relatively small providers restricted by regional coverage as Britannic Retirement Solutions has closed its doors to business, AMP has pulled out of the UK and GE Life no longer offers the products.
He says: “Home reversion is something we are looking at and we want to be part of the market. My concern is that if we do not get regulation, intermediaries will be anxious about offering reversion plans and the product can offer a certainty around inheritance that is not available in mortgage-based schemes.”