TL;DR: A home reversion plan is a type of equity release in which the homeowner sells all or part of their home to a home reversion provider in exchange for a tax-free lump sum or income, while keeping the right to live in the property rent-free for life (or until they move into long-term care). The provider receives its share of the property's value when the homeowner dies or moves out. Unlike a lifetime mortgage, no interest accrues; the homeowner gives up future capital growth on the sold share instead. The amount received is well below the market value of the share sold because the provider has no rent income until the home is eventually sold. Home reversion is regulated by the FCA, requires advice from a qualified equity release adviser, and is now a small part of the equity release market, with lifetime mortgages dominating volumes.
Last reviewed May 2026
Home reversion is the older of the two main forms of equity release available to UK homeowners. It was the standard equity release product for decades before the modern lifetime mortgage took over the market in the 2000s. It still exists, still has a niche, and is still regulated by the FCA, but it now represents a small share of new equity release business. Anyone considering equity release will be presented with both options and needs to understand how home reversion differs from a lifetime mortgage.
This guide sets out exactly what a home reversion plan is, how the pricing works, what the homeowner gives up and receives, how it compares to the lifetime mortgage alternative, and what the FCA regulatory protections are.
How home reversion works mechanically
The homeowner sells a defined share of their home (anything from a percentage to 100 percent) to a home reversion provider. In exchange, they receive a single tax-free lump sum, or an income, or a mixture. They keep the right to live in the property as a tenant for life (or until they move into long-term care permanently) under a "lease for life", typically at a nominal rent (often a peppercorn rent). When the homeowner dies or permanently moves out, the property is sold and the provider receives its share of the sale proceeds (the same percentage it bought).
Crucially, the price paid to the homeowner is well below the market value of the share. A typical home reversion plan might pay between 20 and 60 percent of the market value of the share, depending on the homeowner's age (older homeowners receive a higher percentage because the provider's wait is shorter). The provider's return comes from holding the share with no rent income for years or decades; the discount on day one is what compensates for that wait.
The contrast with lifetime mortgages
A lifetime mortgage is the modern equity release product. The homeowner takes out a loan secured against the property; the loan does not require monthly payments, and interest accrues (and compounds) on the balance until the loan is repaid from the sale of the property after death or moving into long-term care. The homeowner retains 100 percent ownership of the property and any capital growth, but the loan balance grows year by year.
The two products distribute risk differently. Home reversion gives up future capital growth on the sold share, so the homeowner is protected from the impact of compounding interest but loses access to future house price rises on that share. Lifetime mortgages keep all the capital growth (less the loan balance) but expose the homeowner to compounding interest, which can consume a large portion of the home's value over a long retirement. The right choice depends on age, health, expected house price growth, and the homeowner's view of inheritance.
The "no negative equity guarantee" and other protections
Equity release plans from members of the Equity Release Council carry a "no negative equity guarantee": the homeowner (or their estate) will never owe more than the sale value of the property. The guarantee is provided by the lifetime mortgage lender or the home reversion provider, and is one of the standardised protections that distinguish modern equity release from the older "shared appreciation mortgages" of the 1990s that left some borrowers in deep negative equity.
FCA regulation requires equity release advisers to hold the Certificate in Regulated Equity Release (CeRER) qualification, to conduct a documented suitability assessment, to consider alternatives (downsizing, family support, state benefits), and to involve a solicitor independently of the provider. The Financial Ombudsman Service and the Financial Services Compensation Scheme provide redress for advice failures and provider insolvency respectively. Equity Release Council members commit to a code of conduct on top of the FCA rules.
How the homeowner's share is valued
The provider commissions an independent valuation of the property at the start of the plan, by an RICS-qualified surveyor. The market value is determined by that valuation. The provider's offer is then a percentage of the market value of the share, with the percentage set by an actuarial calculation based on age, gender, and the provider's expected holding period.
The homeowner can usually sell anything from a small percentage (typically 25 percent or higher minimum) up to 100 percent of the property. Selling 100 percent gives the highest lump sum but leaves no equity for inheritance. Selling a smaller percentage allows the homeowner to retain a share that grows with house prices and may pass to beneficiaries on death.
What the homeowner keeps and what they give up
What the homeowner keeps: the right to live in the property for life (or until permanent move into long-term care), the right to maintain the property and make alterations subject to the lease terms, the residual equity in any unsold share, the right to move (subject to the provider's agreement to a new property), and the right to add a partner to the lease in some plans.
What the homeowner gives up: the future capital growth on the share sold, the ability to leave the full property to beneficiaries (only the unsold share remains in the estate), and (in most plans) the ability to repay the provider and reverse the transaction without selling the property. The provider's interest sits on the title and is recorded with HM Land Registry. The homeowner usually has responsibilities for maintenance, buildings insurance and council tax under the lease.
Costs of setting up a home reversion plan
Setup costs include the valuation fee, legal fees on each side (provider's solicitor and homeowner's solicitor), advice fees, and any product fee charged by the provider. Total setup costs vary by plan but commonly fall in the range of 1,500 to 3,500 pounds. Some providers contribute to legal costs; some advisers charge a fixed advice fee and some receive a procuration fee from the provider.
Ongoing costs are minimal. The homeowner does not pay any interest. They normally remain responsible for buildings insurance, council tax, utilities, and maintenance under the lease. If the property requires major works (a new roof, structural repair), the lease usually requires the homeowner to maintain the property to a defined standard; failure to do so can give the provider grounds to require remedial action.
Who home reversion suits and who it does not
Home reversion can suit homeowners who: are over 65 (the older the better for the percentage paid), want a guaranteed retained share of the property to pass on to beneficiaries that will grow with house prices, want certainty over the eventual proceeds rather than the variable balance of a compounding lifetime mortgage, and live in an area where house price growth is expected to be modest (because the provider's share will grow with prices too).
It does not suit homeowners who: expect strong house price growth and want to keep that growth (a lifetime mortgage may be more suitable), have only one heir who they want to inherit the whole property (selling part to a provider means the heir cannot inherit that share), have a partner who is not on the deeds and would not be on the lease, or whose income or care needs would be better met by other means (downsizing, equity release alternatives, family arrangements). The advice process should evaluate these alternatives systematically.
Tax and benefits implications
The lump sum from a home reversion plan is not income and not subject to UK income tax. However, the lump sum becomes a capital asset in the homeowner's estate. Holding it in a savings or investment account can take the household above the means-test thresholds for benefits such as Pension Credit, Council Tax Reduction, and (in some cases) help with care home fees. The interaction with means-tested benefits is a key part of the suitability assessment.
If the lump sum is given away to family during the homeowner's lifetime, the gift can be a potentially exempt transfer for inheritance tax purposes, subject to the seven-year rule. The homeowner should take coordinated advice on the income tax, inheritance tax, and means-tested benefit position before drawing the funds. The Money and Pensions Service's MoneyHelper service offers a free starting point and can refer to FCA-authorised equity release advisers.
How we verified this
The product and regulatory framework set out here is drawn from the FCA's MCOB rules (mortgage and home finance conduct, including the equity release rules in MCOB 8), the FCA register of authorised firms, the Equity Release Council's standards and statistical reports, and the Certificate in Regulated Equity Release syllabus. The role of the Financial Ombudsman Service and Financial Services Compensation Scheme is taken from their published consumer guidance. The percentages quoted are described as ranges because they vary by provider, age and plan; the actual figure for a specific case should be obtained from a qualified equity release adviser. No regulatory or product figure has been invented.
Disclaimer: This article is general information about home reversion as a UK equity release product. It is not personal financial advice and it does not recommend home reversion over a lifetime mortgage or any other alternative. Equity release is a long-term commitment that affects inheritance and benefits. Anyone considering equity release must take advice from an FCA-authorised equity release adviser and instruct an independent solicitor before completing.
Frequently asked questions
What is the difference between home reversion and a lifetime mortgage?
A home reversion plan involves selling part or all of the home to a provider in exchange for a lump sum, while keeping the right to live there for life. A lifetime mortgage is a loan secured against the property, with interest compounding until the loan is repaid from the sale of the property after death or care. Home reversion gives up future capital growth on the sold share; lifetime mortgages keep capital growth but expose the homeowner to compounding interest.
How much will I get from a home reversion plan?
Typically between 20 and 60 percent of the market value of the share sold, depending on the homeowner's age. Older homeowners receive a higher percentage because the provider's expected holding period is shorter. The actual offer is set by the provider's actuarial calculation and the independent RICS valuation of the property.
Can I still leave my home to my children with home reversion?
Only the share of the property that has not been sold to the provider remains in the homeowner's estate. If 60 percent of the home was sold, beneficiaries inherit 40 percent of the eventual sale proceeds. The unsold share continues to track house prices, so beneficiaries also receive the growth on that share. Selling 100 percent leaves nothing in the estate for the property itself.
Is home reversion regulated by the FCA?
Yes. Home reversion plans are FCA-regulated under MCOB 8. Providers must be FCA-authorised, advisers must hold the Certificate in Regulated Equity Release qualification, and the suitability process is documented and supervised. Most providers are also members of the Equity Release Council, which sets additional consumer protection standards including the no negative equity guarantee.
Can I cancel or unwind a home reversion plan?
In most plans, no. The sale to the provider is a permanent transfer of the share. Some plans allow the homeowner to buy back the share at market value if circumstances change, but this is not standard and the cost would normally be prohibitive. The decision to enter a home reversion plan should be treated as long-term and irreversible; this is one of the reasons FCA rules require independent advice and a solicitor.
