Helping my elderly neighbour with an equity release

vicky_c3

Hey all

My neighbour is in his late 70s. He is a freeholder/leaseholder (i.e., he is the shareholder of the company that owns the freehold of the block, and has a 900+ year lease on the individual flat). He has no outstanding loans against the flat. The flat is worth around £450,000. He has a state pension of around £12,000 a year; this is his only income. 

He needs to come up with £11,000 to pay for building repairs. 

The management company want to force him to sell, but that would be terrible, as he has lived in this block his entire life and has never lived anywhere else.

StepChange were helping him find and equity release, but they eventually were not able to find a lender because none would accept the block's steel/concrete framed flat with evidence of cavity fill insulation.

The block is currently undergoing renovations and will be in a very good state of repair once complete. 

I am really astounded StepChange were not able to find a lender, so I have asked my own mortgage broker to seek out other possible lenders. 

Can you think of any other solutions? I would be so grateful for any ideas. 

Many thanks

V 

mebu60

A loan from those who will inherit? (Repaid out of the estate). 

vicky_c3

 mebu60 said:

A loan from those who will inherit? (Repaid out of the estate). 

Thanks for the suggestion! We could consider that, but he doesn't really have any family. So, this would essentially have to be legally guaranteed, etc. I've considered raising the money myself to give him a loan in exchange for a secured charge against the property. I suppose that would be similar to what you suggested? 

mebu60

Hopefully he has a will?! And therefore inheritors (though they may not be individuals of course). And LPAs? 

user1977

vicky_c3 said:

 mebu60 said:

A loan from those who will inherit? (Repaid out of the estate). 

Thanks for the suggestion! We could consider that, but he doesn't really have any family. So, this would essentially have to be legally guaranteed, etc. I've considered raising the money myself to give him a loan in exchange for a secured charge against the property. I suppose that would be similar to what you suggested? 

Yes, anyone can lend him money.

But what happens next time a similar cost comes up? Does he not have any savings?

vicky_c3

mebu60 said:

Hopefully he has a will?! And therefore inheritors (though they may not be individuals of course). And LPAs? 

I can ask him. I don't think he has a will. If he does it is in his partner 's benefit who does not live at the property and is also in her late 70s and also does not have any savings. We recently got an LPA in place in favour of his partner because StepChange were not confident he understood the Equity Release, but otherwise he's very much there, just not financially literate. 

user1977 said:

vicky_c3 said:

 mebu60 said:

A loan from those who will inherit? (Repaid out of the estate). 

Thanks for the suggestion! We could consider that, but he doesn't really have any family. So, this would essentially have to be legally guaranteed, etc. I've considered raising the money myself to give him a loan in exchange for a secured charge against the property. I suppose that would be similar to what you suggested? 

Yes, anyone can lend him money.

But what happens next time a similar cost comes up? Does he not have any savings?

No, he doesn't have any savings whatsoever.

I know he can get a loan from anyone, but I'm just not sure who would lend him money and how they would secure their loan.

Another neighbour seems to be getting help from the council. Has anyone heard of this as an avenue before?

mebu60

If he's not got a will and is not married or in a civil partnership with his partner then it could be worth going through the intestacy rules with him for the relevant home nation. That could spur him into action.
Intestacy - who inherits if someone dies without a will? - GOV.UK

Have he and his partner at least considered selling one property and cohabiting with money available to spend on themselves, particularly if there's no-one to leave it to once they are gone? (keeping 'deprivation of assets' in mind while spending in case of going into care). 

Kudos to you for trying to help him. I've not heard of council assistance for such things, would be surprised if it was in their remit even if it was secured against the property and would save the person becoming homeless and therefore a greater burden on them. 

MWT

vicky_c3 said:

StepChange were helping him find and equity release, but they eventually were not able to find a lender because none would accept the block's steel/concrete framed flat with evidence of cavity fill insulation.

The block is currently undergoing renovations and will be in a very good state of repair once complete. 

Even though it may be in a very good state of repair, it will still be a steel framed flat built well before 2000 from the sound of things, and that is going to be very hard/impossible to get equity release on unfortunately.

The lenders are very picky when it comes to the type of construction as they depend on quick sales to recoup their money at the end of the day.

Sadly, I would suggest that down-sizing and moving elsewhere is the best solution as it could potentially release a significant amount of capital to supplement his modest income.

I do appreciate the social impact of a change like this but I'm not sure what alternatives there are and even if you could raise the funds to lend to him this does not fix the precarious state of his finances generally...