Older homeowners may want extra income for travel, family support or rising bills. Conventional equity-release products have commercial terms, pricing and protections.
A Homeowner Pension uses a Location Value Covenant rather than a conventional charge. The owner pays a regular covenant sum to government; government pays a monthly pension to the owner. The original proposal was designed for homeowners over 50.
Worked example
Maude is 74 and owns a central Cambridge house valued at approximately £180,000 in the original briefing. She wants £250 extra each month. Her gross pension is £462 per month, increased annually by 3%. A £212 covenant fee leaves a £250 net pension. The fee is linked to local rental values and paid by whoever owns the property.
If Maude sells, the new owner assumes the covenant and Maude receives the full £462. The sale price falls to reflect the covenant. When she dies, the pension ends while the covenant continues.
| Case | Net annual pension | Annual covenant | Estimated price reduction |
|---|---|---|---|
| Maude, 74 | £3,000 | £2,544 | £42,000 |
| Ronald, 65 | £3,000 | £3,145 | £52,000 |
| Liz, 50 | £3,000 | £4,737 | £79,000 |
The policy purpose
The proposal creates a public alternative to commercial equity release. It converts part of a property’s location value into retirement income while making the continuing obligation visible in the future sale price and the next owner’s costs.
Financial values, rates and tax references restyle the original policy example. They explain the proposed mechanism and are not current financial, tax or legal advice.