UK Home Reversion Plans 2026: How They Work

PILLAR

Last reviewed: 30 April 2026 by Chandraketu Tripathi - 8 primary sources cited - 14 min read

What Is a Home Reversion Plan?

A home reversion plan is a type of equity release product where you sell a portion - or in some cases all - of your property to a specialist reversion company, in exchange for a tax-free lump sum, a series of regular payments, or a combination of both. You retain the right to live in your home for the rest of your life, completely rent-free. When you die or move permanently into long-term care, the property is sold and the reversion company receives its share of the sale proceeds.

The fundamental distinction between a home reversion plan and a lifetime mortgage is that home reversion does not involve borrowing. No loan is created, no interest accrues, and your estate will not owe any debt when the plan ends. Instead, you have permanently transferred a percentage of the property's ownership to the reversion company at the outset.

Home reversion plans are regulated by the Financial Conduct Authority as equity release products. This means that advisers must be FCA-authorised, must follow the Mortgage Conduct of Business (MCOB) rules, and must provide independent advice before you can take out a plan. All FCA-regulated plans include a 14-day cooling-off period.

How Home Reversion Plans Work: A Step-by-Step Example

To illustrate how home reversion works in practice, consider the following example:

Joan is 70 years old. Her property in Sheffield is valued at £350,000. She has no outstanding mortgage. She sells a 50% share of her property to a home reversion company. Because of her age (the company expects to wait a number of years before the property is sold) and the company's costs, the company offers her 45% of the open market value of that 50% share. This means Joan receives:

50% of £350,000 = £175,000 (market value of the share sold). 45% of £175,000 = £78,750 received by Joan.

Joan retains 50% ownership of her property and continues to live there rent-free. If the property is later sold for £420,000, the reversion company receives 50% of £420,000 = £210,000. Joan's estate receives the remaining £210,000.

This example illustrates why the discount to market value is so significant: Joan received £78,750 for a share that was ultimately worth £210,000. The gap reflects the time value of money, the company's administrative costs, and the risk that property values might fall.

The Discounted Purchase Price: Why Home Reversion Companies Pay Less Than Market Value

The most important financial characteristic of home reversion - and the one most commonly misunderstood - is that the reversion company will pay substantially below the open market value for the share it purchases. Typical percentages of market value offered range from 20% to 60%, depending on the applicant's age and the provider.

The reasons for this discount are:

• Deferred realisation: The reversion company cannot sell or use the asset until the plan ends (your death or move into care). This could be years or decades away.
• Opportunity cost: The funds are tied up in your property rather than invested elsewhere. The discount reflects the equivalent of the interest a lender might charge on a lifetime mortgage.
• Uncertainty: The company does not know how long the plan will run, what property prices will be when the property is eventually sold, or what the condition of the property will be at that point.
• Costs: Legal fees, administration, and the cost of maintaining the right to remain obligation are built into the pricing.

Younger applicants receive lower percentages of market value because statistically the company faces a longer wait. A 65-year-old might receive 25-35% of market value; a 75-year-old might receive 40-55%.

Eligibility: Who Can Take Out a Home Reversion Plan?

The eligibility criteria for home reversion plans differ from lifetime mortgages in several important ways:

• Minimum age: Most home reversion plans require the youngest applicant to be aged 65 at minimum, with some providers setting the bar at 60. This is higher than the 55 minimum for lifetime mortgages.
• Property type and value: Standard residential properties in England, Scotland, and Wales are typically eligible. Non-standard construction may not be accepted. Most providers set a minimum property value.
• Residency: The property must be your main residence. Holiday homes, buy-to-let properties, and investment properties are not eligible.
• Existing mortgage: If you have an outstanding mortgage, it may need to be repaid from the reversion proceeds. The remaining funds are then available to you.

Home Reversion vs Lifetime Mortgage: Key Differences

FCA Regulation and Consumer Protections for Home Reversion Plans

Home reversion plans are fully regulated by the FCA as equity release products. The regulatory framework provides several important consumer protections:

• Mandatory independent advice: You must receive advice from an FCA-authorised adviser before taking out any home reversion plan. This is a legal requirement, not a recommendation.
• Vulnerability assessment: Under FCA FG21/3, firms must identify and support customers who may be in a vulnerable situation. This assessment is mandatory during the advice process.
• 14-day cooling-off period: All FCA-regulated home reversion plans include a 14-day cooling-off period. You can withdraw from the plan within this period without penalty.
• Equity Release Council protections: Member plans include the right to remain in your home for life rent-free and the right to move to a suitable alternative property, subject to the provider's criteria. See equityreleasecouncil.com for details.

You should verify any provider on the FCA Register before proceeding with any home reversion plan.

Impact on Means-Tested Benefits and Estate Value

Home reversion, like all equity release, will reduce the value of your estate - because you are permanently transferring ownership of a share of your property. However, unlike a lifetime mortgage, there is no debt and therefore no risk of debt growth eroding the estate further.

Releasing cash through home reversion increases your liquid capital, which can affect entitlement to means-tested benefits. Benefits that may be affected include Pension Credit (see gov.uk/pension-credit), Universal Credit (see gov.uk/universal-credit), Council Tax Reduction (see gov.uk/council-tax-reduction), and Attendance Allowance (see gov.uk/attendance-allowance).

Any decision to take out a home reversion plan should be discussed with family before proceeding. This is particularly important given that the decision is irreversible - once you have sold a share of your property, you cannot buy it back (except in very specific circumstances and at market value). Beneficiaries should understand the implications for the estate before you commit.

The April 2026 changes to inheritance tax are also relevant here - pension assets now form part of the deceased's estate for IHT purposes. This may change the estate planning context for some homeowners who had previously expected pension assets to pass outside of IHT. HMRC's IHT guidance covers current thresholds and allowances.

Home Reversion Providers in the UK in 2026

The home reversion market in the UK is significantly smaller than the lifetime mortgage market. The number of active providers is limited compared to the broader equity release market. The decline of home reversion's share of the market over recent years reflects both the growth of competitive lifetime mortgage products and the structural challenges of home reversion pricing.

If you are considering a home reversion plan, it is essential to:

• Check the FCA Register for currently authorised home reversion providers.
• Work with a whole-of-market adviser who has access to home reversion products alongside lifetime mortgages, to ensure a proper comparison.
• Request a Key Facts Illustration (KFI) before committing to any plan, setting out the full terms, the purchase price as a percentage of market value, and the implications for your estate.

[VERIFY: Current list of FCA-authorised home reversion providers for 2026 - check FCA Register filtered by "home reversion plan" equity release category]

Is Home Reversion Right For You?

Home reversion may be worth considering in specific circumstances:

• You are aged 65 or over and want to access a lump sum without creating any debt.
• You are concerned about the compounding interest risk of a lifetime mortgage and prefer a fixed, debt-free transaction.
• You are prepared to accept a substantially discounted price for the share you sell in exchange for the certainty of no future debt.
• You wish to ring-fence a specific portion of your estate for beneficiaries - by retaining a defined percentage of the property.

Home reversion is unlikely to be suitable if: you are under 65; you want to maximise the immediate cash release (lifetime mortgages typically offer larger initial amounts relative to the long-term cost); or you want to retain the option to buy back the sold share in future.

An FCA-authorised independent adviser will help you compare home reversion against all available lifetime mortgage products and recommend the most suitable option for your specific circumstances and goals.

FAQs

What is a home reversion plan?

A home reversion plan is a type of equity release where you sell a percentage (or all) of your property to a reversion company in exchange for a tax-free lump sum or regular income. You retain the right to live in your home rent-free for life. When the property is eventually sold, the reversion company receives its share of the proceeds. No debt is created.

What is the minimum age for a home reversion plan?

Most home reversion plans require the youngest applicant to be aged 65 at minimum; some providers accept applicants from age 60. This is higher than the 55 minimum for standard lifetime mortgages. The younger you are, the lower the percentage of market value you will be offered for your share.

How much do home reversion companies pay for a share of my property?

Home reversion companies typically pay 20%-60% of the open market value of the share they purchase, depending on your age and the provider. For example, selling a 50% share of a £400,000 property might yield £60,000-£120,000 rather than the £200,000 market value of that share. The discount reflects the deferred nature of the company's return.

Is a home reversion plan regulated by the FCA?

Yes. Home reversion plans are regulated by the FCA under the MCOB framework, the same rules that govern lifetime mortgages. Independent advice from an FCA-authorised adviser is legally required before taking out any home reversion plan. All plans include a 14-day cooling-off period.

What is the difference between a home reversion plan and a lifetime mortgage?

With a lifetime mortgage you borrow against your property (retaining full ownership) and interest compounds over time. With home reversion you sell a share of the property outright - no debt is created, but you receive substantially below market value for the share sold. Lifetime mortgages represent approximately 99% of the equity release market.

Are home reversion plans covered by the no-negative-equity guarantee?

The no-negative-equity guarantee applies to lifetime mortgages (preventing debt from exceeding sale proceeds). Home reversion plans do not involve borrowing, so the concept does not apply in the same way. However, Equity Release Council member home reversion plans include the right to remain in your property for life rent-free and the right to move to a suitable alternative property.

Who are the main home reversion providers in the UK in 2026?

The home reversion market is limited compared to lifetime mortgages. Always check the FCA Register for currently authorised providers and work with a whole-of-market adviser to ensure you see the full range of options available.

Can I sell only part of my property under a home reversion scheme?

Yes. Most plans allow you to sell a defined percentage of your property - for example, 25%, 50%, or 75% - retaining ownership of the remainder. The portion you retain continues to benefit from any property price appreciation. This allows you to ringfence part of the estate for beneficiaries while still accessing a lump sum.