Finance Minister Edward Scicluna has announced that the Government task force is preparing the framework for the initiation of an equity release scheme through which elderly persons can obtain a loan from financial institutions in order to supplement their pension income. Professor Scicluna also announced regulations aimed at protecting the elderly who decide to give up their residence in barter with a service to move into private homes for the elderly.
Elderly persons who own their property but who may have insufficient funds to enable them to enjoy a quality of life they yearn for, can now release part of the value of their home whilst continuing to reside there. This will be possible through a scheme known as Equity Release, by exchanging up to 60% of the value of their property with a financial institution which will in turn hand over the amount in one lump sum or in instalments, according to the agreement between both parties.
Minister Scicluna stressed that this voluntary scheme will be regulated in a way so that the amount loaned by financial institutions will have a fixed rate of interest, with the heirs having a three-year period to decide whether to redeem the loan made or allow the property to be sold so that the financial institution can recoup its loan.
Minister Scicluna stated that “this will be a voluntary loan. Let us be clear, I believe there is a high demand for this service, as it will allow the elderly wishing to remain in their homes to do so. However, they will have to supplement their pension by taking from their home a certain stream of income or a lump sum, or even a bank, for eventual settlement after the individual’s demise.”
Professor Scicluna stated that this scheme is another measure to assist the elderly to have an adequate income with their pension. This, the Minister added, can be a boost for many elderly who are home-owners but do not have funds saved up to enable them to enjoy the quality of life they wish for. The Finance Minister expressed the hope that this scheme will become operational in the shortest possible time.
Professor Scicluna added that the next step is the formulation of other rules to ensure the elderly are not exploited when they decided to exchange their homes in order to enter and be given a free service in privately-run homes for the elderly. The Minister further stated that inter alia, these elderly persons should be given independent advice to decide whether it would be in their best interests to barter their residence with the provision of a service in a home for the elderly.