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Robert Majkowski, CEO of Fundusz Hipoteczny DOM S.A. which is the largest home reversion provider in Poland, explains that while the local equity release market is still in its nascent stage of development, there are huge opportunities in the country based on its ageing population, the high level of homeownership among senior citizens and the low level of pensions. 

As a leading player in the home reversion market, how would you describe the current market for equity release in Poland?

The professional equity release market has been developing in Poland since 2008. For many decades, a popular solution in our country has been the conclusion of life estate contracts between natural persons. Under such an agreement, in return for the transfer of the right to the property, the beneficiary retained the right to housing and at the same time had to receive a benefit in kind. Over time, this solution has evolved towards cash benefits. More than 10,000 contracts of this type are still concluded annually. The P2P (person to person) market carries a number of threats to senior citizens, and the development of professional solutions offered by financial institutions increased the security of the service for all stakeholders. The industry code of conduct has been in place since 2012. 

Currently, only home reversion solutions are available in our country, despite the fact that a specific law allowing banks to offer a lifetime mortgage already entered into force back in 2014. Despite the enormous potential, which is very well illustrated by 90% of the silver population in Poland being homeowners and a very low level of pensions, the equity release market is still in the nascent stage of development.

In the light of the COVID-19 pandemic, how have equity release providers in Poland been adapting their practices? What are some of the challenges? Have you been able to take the business online?

Poland is a country with quite advanced digitization of the economy, and Polish senior citizens are increasingly using the Internet and new technologies. More than half of Poles aged 60+ use electronic banking, which represents great progress in recent years. Our industry is very active in the field of Internet marketing activities. Educational portals for senior citizens and social networking sites dedicated to this group are very popular and extremely effective marketing tools. Since the outbreak of the COVID-19 pandemic, in addition to implementing sanitary procedures in relation to personal contacts, we have also launched an online chat function and a video chat. However, for our customers, a phone call that ends with a physical meeting is the preferred and most popular model. Due to legal restrictions, we cannot conclude contracts online unfortunately.

How would you characterise the regulatory framework for equity release in Poland? Do you see active interest from policy makers in growing the market?

Currently, the home reversion market operates on the basis of the general provisions of the Civil Code. Professional entities must also adhere to industry principles of good practice. Since 2012, the Ombudsman and the Office of Consumer Protection have been calling for increased protection of consumers using the solution. As from 2013, together with the Ministry of Economy and Polish parliamentarians, we started the process of regulating the market, which in 2015, further to extensive public consultations, resulted in the creation of a very well-rated draft “Act on lifetime cash benefit”, which was to regulate home reversion schemes. 

At the same time, between 2009 and 2014, work was carried out on the Act to introduce the lifetime mortgage into the Polish banking system, which ended with its adoption. Unfortunately, this provision remains a “dead” law to this day, in the sense that it has never been used. In our opinion, according to the assessment of the Ombudsman and the Office of Consumer Protection, in order to ensure the safety of customers and the development of the market, it would be better to adopt appropriate, ready-made regulations. Nevertheless, for over a decade, the professional market, unlike the P2P market, has been able to avoid any scandals or reputational problems. Current customers, in all surveys undertaken, have confirmed above-average satisfaction with the home reversion service.

How do you see the level of interest in equity release in Poland among the media and the public?

Media interest in the equity release service has fluctuated over time. Over the years 2013 to 2014, when work on the regulations was underway, journalists showed great interest. However, this interest has decreased over time. However, currently, due to the increasing difficulties and inefficiency of the pension system in Poland, the topic is attracting increasing attention. Equity release is beginning to be seen as one of the puzzle pieces of a modern and comprehensive pension system.

What opportunities do you see for new funders and investors to enter the Polish market?

Poland is a country with great opportunities and potential. From 1992 until the outbreak of the pandemic, Polish GDP grew continuously and dynamically. Despite this increase in comparison to the so-called countries of the old EU, there is still visible inequality and a lack of full convergence. A very stable real estate market, with 90% of the silver population in Poland owning the houses in which they live , a very low level of pensions and the ageing society in a country of 38 million population is a huge opportunity.