TL;DR: A home reversion plan is the older, less common form of equity release. The homeowner sells all or part of their home to a reversion provider in exchange for a tax-free cash lump sum or regular income, and continues to live in the home rent-free (or at a peppercorn rent) under a lifetime lease, until death or long-term care. The main advantages are no interest, no debt rolling up, a known future value certainty, and (where only part is sold) some ringfenced inheritance. The main disadvantages are that the sale price is materially below market value, the loss of upside on the share sold, the loss of the ability to sell or move easily, the inability to bequeath the sold share, and the fact that reversions are now a niche product with few active providers.
Last reviewed May 2026
Equity release in the UK has two main forms: lifetime mortgages (overwhelmingly the more common modern product) and home reversion plans. The two work in fundamentally different ways, and home reversion's structure makes it both more flexible in some respects and significantly less flexible in others. Many older homeowners considering equity release encounter both products and need to understand the trade-offs.
This guide explains how home reversion works in detail, sets out the principal advantages and disadvantages, the regulatory protections, the situations in which a reversion can outperform a lifetime mortgage, and the questions to put to a qualified equity release adviser before signing.
How a home reversion plan works
Under a home reversion plan the homeowner sells a defined share of the legal title to a reversion provider in exchange for a tax-free cash lump sum or a series of income payments. The share can be all of the property (100 percent) or a smaller percentage chosen at outset (for example 25 percent or 50 percent). The reversion provider pays significantly less than the market value of the share, reflecting that the provider will not realise the property until the homeowner has died or moved into long-term care.
In exchange for the share, the provider grants the homeowner a lifetime lease on the property, allowing them to continue living in it for the rest of their life either rent-free or at a peppercorn (nominal) rent. The homeowner remains responsible for the maintenance, insurance, and ongoing costs of the property. When the homeowner dies or moves permanently into long-term care, the property is sold and the provider receives its share of the sale proceeds. Any retained share by the homeowner (or now the estate) is paid to the estate.
The price paid for the share at outset is typically between 30 percent and 60 percent of the market value of that share, depending on the homeowner's age, health, and the underlying actuarial assumptions. An 85-year-old in poor health will be offered a higher percentage of market value than a 65-year-old in robust health, because the provider's expected wait for the property is shorter.
The advantages of home reversion
The first advantage is certainty about the future capital position. Because the provider has bought a defined share of the property, the homeowner (and the estate) knows exactly what proportion of the eventual sale price will go where. With a lifetime mortgage, rolled-up interest can erode the equity unpredictably over many years; with reversion, the maths is settled at the start.
The second advantage is no debt and no interest. A reversion is a sale, not a loan. There is no interest accumulating, no risk that compound interest exceeds the value of the property, and no possibility of "negative equity" in the lifetime-mortgage sense. The Equity Release Council "no negative equity guarantee" applies to lifetime mortgages; home reversions do not need it because there is no debt to be negative against.
The third advantage is ringfenced inheritance where only part of the property is sold. If the homeowner sells 40 percent of the property to the provider and keeps 60 percent, the 60 percent will be paid to the estate on the eventual sale, no matter how long the homeowner lives or what happens to property values. With a lifetime mortgage, a long life can roll up enough interest to absorb most or all of the residual equity.
The fourth advantage is the lifetime lease itself: the homeowner has a contractual right to remain in the property for life, regardless of changes in property values, provider ownership, or other circumstances. The lease is registered against the title and is enforceable against any future owner of the reversion share.
The disadvantages of home reversion
The first disadvantage is that the homeowner sells the share at a deep discount. The percentage of market value paid is typically a fraction of the share's worth, because the provider has to wait an uncertain period for repayment and gets no rental return during the wait. Effectively the homeowner is converting future capital into present capital at a meaningful discount.
The second disadvantage is the loss of future upside on the share sold. If property values rise during the homeowner's remaining life, the upside on the sold share accrues entirely to the provider, not to the homeowner or the estate. This is the trade-off for the certainty: the homeowner has converted an uncertain future amount into a known present amount.
The third disadvantage is loss of flexibility. A home reversion is hard to unwind. Repaying the provider in life is theoretically possible but typically requires the homeowner to buy back the share at market value, which can be expensive and is not always allowed by the contract. Moving home can also be difficult: the reversion has to either move with the homeowner to the new property (if the provider agrees) or be settled, again often at market value.
The fourth disadvantage is that the homeowner can no longer bequeath the sold share. The share is owned by the provider. A homeowner who sells 50 percent of a 400,000 pound house has effectively reduced the estate's share of any future sale to 50 percent of that property's eventual sale price, regardless of how many years the homeowner lives or how much the property appreciates.
The fifth disadvantage is product scarcity. Modern equity release is dominated by lifetime mortgages, and only a small number of providers actively write new home reversion plans. The competition for business is thinner than in the lifetime mortgage market, and pricing can therefore be less competitive than it would be in a more crowded market.
Regulation and protections
Home reversion plans have been regulated by the Financial Conduct Authority since 6 April 2007, alongside lifetime mortgages. The two products are regulated under the same equity release framework. Advisers selling either product must hold specific equity release qualifications.
The Equity Release Council is the trade body covering both lifetime mortgages and home reversions. Its product standards for home reversion include a lifetime tenure guarantee (the homeowner can stay for life), a contractual right to move home subject to provider approval, and the right to receive independent legal advice before signing.
The lifetime lease is registered against the property's title at the Land Registry, ensuring it is enforceable even if the reversion provider sells the freehold share on. Any sale of the reversion share by the provider is subject to the lease, so the homeowner's right to remain in the property is unaffected by changes in the provider's ownership.
When a home reversion can outperform a lifetime mortgage
The clearest case for reversion is a homeowner who wants to release a large chunk of equity, expects to live for many more years, and prioritises certainty over potential upside. Because lifetime mortgage interest compounds over time, a long-lived homeowner can find that a lifetime mortgage absorbs most of the eventual sale value. The reversion's fixed share structure avoids that outcome.
A homeowner who wants to guarantee a specific minimum inheritance for their family also has a stronger case for reversion. Selling only part of the property to the provider creates a known retained share for the estate that cannot be eroded by rising interest.
A homeowner who does not expect house prices to rise materially during their remaining life loses less upside by selling part of the property than a homeowner expecting strong appreciation. This is one of the harder predictions to make, and most advisers would caution against banking on flat or falling prices over a 20+ year horizon.
The questions to ask before agreeing to a reversion
A serious enquiry into a reversion plan should cover: the percentage of market value being paid; the actuarial assumptions behind that percentage (age, health, expected life expectancy); the terms of the lifetime lease and any restrictions on alterations to the property; the rules on moving home; the rules on letting all or part of the property; the procedure on death or move to long-term care; the cooling-off period and right to cancel; the impact on means-tested benefits including pension credit and council tax support; and the inheritance position if the homeowner dies very soon after taking the plan out.
An equity release qualified adviser is required by FCA rules. Independent legal advice from a solicitor not connected to the provider is also a regulatory requirement. The cost of advice is in addition to the headline release amount and should be factored into the comparison with a lifetime mortgage.
How we verified this
The product mechanics described here reflect the FCA's MCOB sourcebook chapter 9 on equity release, the published product standards of the Equity Release Council, MoneyHelper's published guidance on home reversion plans, and the Financial Conduct Authority's consumer information on equity release. No specific provider's pricing, FRN, or contract terms have been invented. The percentage-of-market-value ranges given are typical market figures reflecting the actuarial pricing of reversion plans across the small number of active providers.
Disclaimer: This article is general information about home reversion plans as an equity release product in the UK. It is not personal financial advice. Equity release is a regulated, irreversible decision with lifelong consequences for the homeowner and the estate. Anyone considering equity release should take advice from an FCA-authorised equity release qualified adviser and independent legal advice from a solicitor before signing.
Frequently asked questions
What are the main pros and cons of a home reversion plan?
The main pros are certainty about the future capital position, no debt or interest, ringfenced inheritance for any retained share, and a contractual right to remain in the home for life. The main cons are that the property share is sold at a deep discount to market value, all future upside on the sold share is lost, the plan is hard to unwind, the sold share cannot be bequeathed, and modern reversion is a niche product with few active providers.
How is a home reversion different from a lifetime mortgage?
A home reversion is a sale of part of the property to the provider, with a lifetime lease back. A lifetime mortgage is a loan secured against the property, with interest that typically rolls up and is repaid from the eventual sale proceeds. The reversion has no interest and no debt; the lifetime mortgage has interest but leaves the homeowner as the sole legal owner. The choice depends on the homeowner's priorities around certainty, flexibility, and future upside.
Can I sell part of my home and keep the rest?
Yes. Most home reversion plans allow the homeowner to sell a defined share rather than the whole property. Selling 25 percent or 50 percent rather than 100 percent reduces the cash released today but preserves a known share for the estate on the eventual sale. The minimum share most providers will accept is typically 25 percent.
Can I move home after taking out a reversion?
Most modern reversion contracts allow porting to a new property subject to provider approval, broadly along similar lines to porting a lifetime mortgage. The replacement property has to meet the provider's lending criteria (suitable type, condition, value). If porting is not possible, the homeowner can typically settle the plan, usually by buying back the sold share at its current market value.
Will a home reversion affect my benefits?
It can. The cash released from a reversion increases capital, which may affect means-tested benefits such as Pension Credit, Universal Credit, and council tax support. The impact depends on how the cash is used and how much remains in the estate. An adviser should always check the means-tested benefits position before completion, and the homeowner should not assume the cash release is tax-free for benefits purposes (it is tax-free for income tax but counted as capital).
