JRF: Home cash plan to help income-poor older people stay in their own homes

The Joseph Rowntree Foundation (JRF) has helped launch a new pilot scheme to enable asset rich but cash poor older people pay for additional support at home, which could help to make their lives easier and allow them to stay in their own homes for longer, rather than move into a care home.

The JRF is releasing a report, Can equity release help older home-owners improve their quality of life?, by Rachel Terry and Richard Gibson, which details how the pilot scheme will run and provides a tool kit for local authorities interested in similar solutions for their own areas.

The pilot programme, an advice service offering practical solutions to older home-owners with financial concerns, was developed in response to the anxiety felt by older people about using equity release schemes, the costs involved, and the risks to existing benefits. It is being run by JRF in collaboration with local authorities, the equity release industry and voluntary bodies, with advice from the DWP.

The programme will provide access to a unique new equity release product – the Home Cash Plan – provided by retirement specialists Just Retirement and endorsed by trade body SHIP (Safe Home Income Plans). It has been designed specifically for income-poor older people and, unlike other equity release products, allows home-owners to release small sums of money from their property safely and easily, without jeopardising their benefits.

Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, said: “Around a million older home owners in the UK have at least £100,000 in housing equity yet have such small incomes that they qualify for means-tested benefits, meaning they can’t afford to pay for additional support at home such as gardening or shopping.

Previous research has shown that most older people would prefer to be supported to stay at home rather than move into a care home. Our aim is to find a practical solution to enable these people to release the equity in their homes, without jeopardising their pension credit, so they can stay at home for longer.”

Key features of the pilot:

· The involvement of local authorities and local voluntary bodies to ensure people are receiving all the financial help to which they are entitled.

· Relatively small sums of money can be drawn compared with other equity release products.

· The risk of losing pension credit is minimized (due to drawings being on demand rather than pre-determined and the minimum initial drawing being well below the savings threshold).

Co-author of the report, Rachel Terry said: “Research tells us that older home-owners may only need an extra £20 or £30 a week to pay for additional help at home and improve their quality of life, but many can’t afford this on their small incomes – typically £200 a week for a couple – which is where the new pilot schemes come in. In many cases people may simply be missing out on benefits they are entitled to, but if this still doesn’t provide enough extra money, the Home Cash Plan would enable them to top up their income, safely and easily, without losing their benefits.”

The pilot will run in three local authorities: The London Borough of Islington, the Royal Borough of Kensington and Chelsea, and Maidstone Borough Council. Each council has a specific focus:

· The London Borough of Islington is particularly concerned about the health and well-being of older people, specifically in finding out if equity release is a viable and sustainable option to enable older people to stay in their own homes for longer before needing residential care.

· The Royal Borough of Kensington and Chelsea is concerned about older home-owners whose circumstances are becoming increasingly difficult due to their level of income. They want to promote choice and enhance the quality of life of their residents, and are keen to explore the options available to ensure this.

· Maidstone Borough Council wants to facilitate equity release as a valuable service for the wellbeing of its older home-owners. As a district council, it does not have responsibility for social care, but will co-ordinate the pilot scheme with all partner agencies, not just those in contact with social services.

The three pilot schemes will run until summer 2011, during which time each one will be independently assessed by JRF. A final report will be produced after the final assessment in July 2011.

Steve Kyle, Director at Just Retirement, said; “We are very pleased to be involved in this important and innovative project. Just Retirement has been keen to extend the reach of equity release advice to those who need it most for some time. With the endorsement of the Joseph Rowntree Foundation and the involvement of key local authorities and voluntary organisations, we are confident that the pilots will be a success.”

Julia Unwin added: “Whatever the outcome of the pilot schemes, it is especially important in the current climate to find viable solutions to enable older people get the additional help they need to be supported at home.”