We already know 2014 was a great year for equity release. Even though we are only a few weeks into 2015 we already have news of another major player entering the market.
This time it is Legal and General (L&G). Perhaps not the name you may have been expecting, but it has announced that it is to buy New Life Home Finance, otherwise known as Newlife, in a deal estimated to be worth £5 million.
The history of Newlife
Newlife was founded in 2003 and was created with the specific desire to provide a selection of equity release products. At the time it was one of a small number of lenders to do this.
The privately-owned company agreed to the sale to Legal and General on 9th February. From this date onwards, according to information provided on the Newlife UK website, all funding for equity release deals through this company will be met by Legal and General. The deal will be subject to the usual approval processes by the Financial Conduct Authority (FCA). If this approval goes through it will enable the sale to be completed in the first half of this year.
How will Legal and General position themselves in the market?
Assuming the sale goes through smoothly, it could well be that L&G will grow to become a major player in equity release and lifetime mortgage products. Bernie Hickman, the managing director of L&G’s individual retirement business, said the company had “close to £40 billion” in annuity assets. This would enable them to provide ample funding to those wishing to seek out funding for their retirement in this way.
This is clearly a significant move in the market. It will be intriguing to see how L&G performs in this area in the second part of the year once the deal is made official and has FCA approval. With sizeable assets to back their foray into this burgeoning market, L&G could indeed be providing a significant portion of people with the finance they need released against the value of their homes.
While we are still some distance from equity release becoming truly commonplace as a way to release funds upon retirement, this acquisition is
perhaps the clearest sign yet that we could be headed in this direction. There are definitely signs of a sea-change occurring here, as more people consider freeing up cash held in their properties to fund the retirement they want. Clearly there could potentially be a knock-on effect in terms of money left to dependents or descendants. However some reports indicate that retired people are discussing the options with their children to ensure they reach the right solution in their situation.
One thing that is clear is that Legal and General has ambitious plans regarding their entry into this market. Indeed, a director for Newlife, Peter Lucas, said they were looking forward to becoming a leader in this market. Clearly the Newlife name is not going to disappear.