TL;DR: A home reversion scheme is a regulated form of equity release in which 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 retains the right to live in the property rent-free (or at a peppercorn rent) for the rest of their life under a lifetime lease. There is no interest and no debt. The price paid for the share is significantly below market value because the provider must wait until the homeowner dies or moves into long-term care to realise the property. Home reversion is regulated by the FCA, requires specialist advice and independent legal advice, and is now a niche product compared with the more common lifetime mortgage.
Last reviewed May 2026
Home reversion is one of two equity release products regulated by the Financial Conduct Authority in the UK, alongside the lifetime mortgage. The two work in fundamentally different ways, and a homeowner considering equity release needs to understand the structure of each before deciding which (if either) suits them.
This guide explains what a home reversion scheme is, how the lifetime lease works, how the price paid for the property share is calculated, the regulatory framework, the trade-offs against a lifetime mortgage, and the practical considerations a homeowner should weigh before signing.
What a home reversion scheme is
A home reversion scheme is a contract under which the homeowner sells all or a defined share of the legal title to their home to a regulated reversion provider in exchange for a tax-free cash sum (or income). The buyer pays a price calculated as a discounted percentage of the market value of the share being sold, reflecting the fact that the buyer cannot realise the value of the property until the homeowner has died or moved permanently into long-term care.
The homeowner does not vacate the property. Instead, the contract grants them a lifetime lease over the property, allowing them to remain in it rent-free (or at a token peppercorn rent) for the rest of their life. The homeowner remains responsible for paying the property's ongoing costs: council tax, utilities, insurance, and maintenance.
When the homeowner dies or moves into long-term residential care, the property is sold and the reversion provider receives its proportionate share of the proceeds. If the homeowner sold 50 percent of the property, the provider receives 50 percent of the eventual sale price. Any retained share of the homeowner's is paid to the estate.
How the lifetime lease works
The lifetime lease is the key legal mechanism that distinguishes a reversion from an outright sale. The lease is registered against the property's title at the Land Registry and grants the homeowner exclusive possession of the property for life. The provider's freehold ownership of the share is effectively burdened by the lease for the duration of the homeowner's life.
The lease typically prohibits the homeowner from letting the property out (or restricts it heavily), and from making major alterations without provider consent, but otherwise allows normal residential use. The provider has the right to inspect the property periodically to ensure it is being maintained in reasonable condition; the homeowner has the right to quiet enjoyment for life.
The lease usually allows the homeowner to move home, subject to the provider agreeing the new property meets their criteria, in which case the reversion can be ported to the new property on broadly equivalent terms. If porting is not possible, the homeowner can typically settle the reversion by buying back the sold share at its current market value (which can be expensive).
How the price for the share is calculated
The price paid by the provider for the share sold is calculated as a percentage of the market value of that share. The percentage depends on the homeowner's age and health, the type of property, and the actuarial assumptions about how long the provider will have to wait before realising the property.
For a homeowner in their 60s with normal life expectancy the percentage is typically in the 25 percent to 35 percent range, reflecting a long expected wait. For a homeowner in their 80s the percentage might be 50 percent to 60 percent of the share's market value, reflecting a shorter expected wait. Homeowners with serious health conditions can sometimes qualify for "enhanced" terms with a higher percentage.
The provider's discount funds three things: the time-value of money over the expected wait, the running costs of administering the scheme, and a profit margin. The provider is taking the risk that the homeowner lives much longer than the actuarial expectation, in which case the provider's effective return shrinks.
The homeowner is effectively converting future capital (the eventual sale value of the share) into present capital (the cash paid today) at a substantial discount. Whether the trade is acceptable depends on the homeowner's need for present capital and their alternatives.
Regulation and consumer protections
Home reversion schemes have been regulated by the FCA since 6 April 2007. Reversion providers must be FCA-authorised, and advisers selling reversions must hold specific equity release qualifications. The FCA Handbook chapter MCOB 9 sets out the conduct rules for equity release including disclosure, suitability assessment, and ongoing service.
The Equity Release Council, the trade body covering both lifetime mortgages and home reversions, sets additional product standards. For reversions these include a lifetime tenure guarantee, the right to port to a new property subject to provider approval, the requirement for independent legal advice, and the requirement for clear disclosure of the percentage of market value being paid.
The Financial Services Compensation Scheme covers FCA-authorised reversion providers in the event of provider failure. The lifetime lease is registered against the property's title so the homeowner's right to remain in the property is enforceable against any future owner of the reversion share if the provider sells it on.
Independent legal advice from a solicitor unconnected with the provider is a regulatory requirement before signing a reversion. The solicitor reviews the contract, explains the implications, and witnesses the signature. The cost of the legal advice is in addition to the headline release amount.
How a home reversion compares with a lifetime mortgage
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 homeowner remains the sole legal owner of the property. The provider receives a fixed sum (the loan plus rolled-up interest) on eventual sale rather than a percentage of the sale price.
A home reversion is a sale of part of the property. There is no debt and no interest. The provider receives a fixed percentage of the eventual sale price rather than a fixed sum. The homeowner is no longer the sole legal owner of the property.
The implications differ. In a long-life scenario, the lifetime mortgage can compound interest until most or all of the home's value is absorbed. The reversion's percentage stays constant, so a long life does not erode the homeowner's retained share. In a short-life scenario, the lifetime mortgage typically gives better value because little interest has accumulated; the reversion gives the provider a windfall because they realise their share quickly.
In a strong house-price-growth scenario, the lifetime mortgage retains the upside for the homeowner because the loan is a fixed amount; the reversion gives the upside to the provider because they receive a percentage of the higher sale price. In a flat or falling market, the reversion's certainty about percentage shares becomes more attractive.
Practical considerations before signing
The most important practical question is whether the homeowner has alternative ways to raise the cash. Downsizing to a smaller home can release similar capital without losing future upside on the property. Borrowing against the home through a conventional mortgage (where affordability permits) can be cheaper, particularly for younger homeowners. Family loans or gifts can sometimes meet immediate cash needs without equity release at all.
The impact on means-tested benefits is the second key question. The cash from a reversion is tax-free for income tax but is treated as capital for benefits purposes. Receiving a large lump sum can disqualify a homeowner from Pension Credit, Housing Benefit, and Council Tax Reduction. An adviser should always model the benefits position before completion.
The impact on inheritance is the third question. Selling a share of the property to a reversion provider permanently reduces what can be left to beneficiaries by that share's percentage of the eventual sale price. Homeowners with strong inheritance priorities may prefer to sell a smaller share or to use a lifetime mortgage with the "inheritance protection" feature.
The provider's reputation and the contract terms matter. The number of active reversion providers is small, so competition is thinner than in the lifetime mortgage market. The contract terms (porting rules, alteration restrictions, inspection rights, settlement-on-death procedure) should be reviewed carefully by the homeowner's solicitor.
How we verified this
The product mechanics described here reflect the FCA's MCOB 9 chapter on equity release, the product standards of the Equity Release Council, the published consumer guidance from MoneyHelper on home reversion plans, and the Financial Conduct Authority's consumer information on equity release. The age-and-percentage ranges given are typical market figures reflecting the actuarial pricing of reversion plans. No specific provider's FRN, contract, or product percentage has been invented.
Disclaimer: This article is general information about home reversion schemes as a regulated equity release product in the UK. It is not personal financial advice. Equity release is a significant, largely irreversible decision. Anyone considering a home reversion or any equity release product should take advice from an FCA-authorised equity release qualified adviser, take independent legal advice from a solicitor unconnected to the provider, and consider alternatives such as downsizing or conventional borrowing before signing.
Frequently asked questions
What is a home reversion scheme in simple terms?
A home reversion scheme is an equity release product where the homeowner sells all or part of their home to a provider in exchange for tax-free cash, and continues to live in the home rent-free for life under a lifetime lease. There is no interest and no debt. When the homeowner dies or moves into long-term care, the property is sold and the provider receives its share of the proceeds. The price paid for the share is significantly below market value because the provider has to wait an uncertain period to realise the property.
How much will I get for my home under a reversion scheme?
Typically between 25 and 60 percent of the market value of the share sold, depending on the homeowner's age, health, and the property type. Younger homeowners in good health receive the lower percentages because the provider's expected wait is longer. Older homeowners or those with qualifying health conditions can receive higher percentages on enhanced terms. The exact figure is set by the provider based on actuarial assumptions.
Can I still live in my home after a reversion?
Yes. The contract grants you a lifetime lease over the property, giving you the right to remain in it rent-free (or at a token peppercorn rent) for the rest of your life. The lease is registered against the property's title at the Land Registry and is enforceable even if the provider sells the share to another investor. You remain responsible for the property's ongoing costs (council tax, utilities, insurance, maintenance).
What happens to my home reversion when I die?
The property is sold and the provider receives its agreed percentage share of the sale proceeds. If you sold 100 percent of the property, the entire sale price goes to the provider. If you sold a smaller share, the remaining percentage is paid to your estate. If you move permanently into long-term residential care during your lifetime, the same process is triggered.
How does home reversion compare with a lifetime mortgage?
A home reversion is a sale of part of the property; a lifetime mortgage is a loan secured against the property with rolling interest. The reversion has no debt or interest but the provider takes a fixed percentage of the eventual sale price. The lifetime mortgage keeps you as sole owner but interest can compound substantially over many years. Reversion can outperform in long-life or strong-price-growth scenarios; the lifetime mortgage can outperform in short-life or flat-price scenarios. The choice depends on age, health, and priorities around certainty versus future upside.
