Most people have heard of equity release. Far fewer understand the specific type of equity release product called a home reversion plan, what makes it different from a lifetime mortgage, and why it matters increasingly in the context of how older adults in England fund their care. For health and social care providers, understanding home reversion is not just useful background knowledge. It is directly relevant to how the families and service users you support are making some of the most consequential financial decisions of their lives.
What a Home Reversion Plan Actually Is
A home reversion plan involves selling a percentage of your property to a specialist provider in exchange for a tax-free lump sum, a regular income, or a combination of both. You retain the right to live in your home for the rest of your life under a legally protected lifetime lease, usually rent-free. When you die or move permanently into long-term care, the property is sold. The reversion provider takes their agreed share of the proceeds, and whatever remains goes to your estate.
Home reversion plans are typically available to people aged 60 and over, though many providers prefer applicants aged 65 and over. The older the applicant, the higher the percentage of market value a provider will typically offer, because the expected duration of the plan is shorter. At age 65, an offer might represent around 25 per cent of market value. At age 90, it could be as high as 60 per cent. The shortfall between what the provider pays and the full market value reflects the cost of granting a lifetime lease: the provider must wait an unknown number of years before they can sell.
Crucially, unlike a lifetime mortgage, there is no interest. You are not taking out a loan. You are selling a fixed share of an asset. The ownership split is permanent from the day you sign. There is no compound interest accumulating, no debt rolling up, and no risk of owing more than the property is worth. What you lose is ownership of that share, and with it, any benefit from future house price growth on the portion sold.
How It Differs from a Lifetime Mortgage
The distinction matters because the two products are regularly conflated in public discourse, in family conversations about funding care, and sometimes in care planning documentation. A lifetime mortgage is a loan secured against your home. You retain full ownership. Interest accrues, typically compounding over the life of the plan, and the total is repaid from the property sale when the plan ends. Most regulated lifetime mortgages include a no negative equity guarantee, meaning the estate will never owe more than the final sale price of the property.
A home reversion plan does not involve a loan. It involves a sale. Once a share is transferred, it cannot be bought back except at full market value. The structure is simpler and more predictable in terms of costs, but it permanently reduces the estate from day one. Lifetime mortgages account for around 99 per cent of the equity release market because most people prefer to retain ownership. Home reversion plans are used in specific circumstances, typically where the applicant is older, in poor health, or has a strong preference for certainty over the portion of their estate that will pass to beneficiaries.
The Care Funding Connection
The reason home reversion plans are relevant to health and social care providers in 2026 is straightforward. Care is expensive, and it is getting more so. The average cost of a care home in England in 2026 ranges from approximately £1,000 to £1,800 per week depending on location and type of care. Nursing care typically costs between £1,200 and £1,800 per week. In London and the South East, fees can exceed £1,750 per week. The local authority means test in England still applies the same capital thresholds it has applied for years: savings above £23,250 make a person a self-funder. The planned £100,000 cap on care costs was scrapped by the Labour government, leaving many families facing open-ended liability.
For self-funding families whose wealth is tied up in property rather than savings, home reversion plans and other equity release products are among the primary mechanisms for generating the liquidity needed to fund care. Many families use the proceeds to fund domiciliary care at home in the first instance, delaying or avoiding care home admission. Others use a lump sum to fund a residential placement directly, or to top up a local authority rate in a preferred home.
For providers delivering extra care and live-in care services, the home reversion plan is often the financial product that makes a home-based care package viable for someone who would otherwise have needed to sell their property outright. Understanding this funding route allows care providers to have better informed conversations with families, to signpost appropriately, and to position their service accurately within the range of options available.
What Providers Need to Know About the Risks
Home reversion plans are regulated by the Financial Conduct Authority and must meet the standards of the Equity Release Council where the provider is a member. Independent financial advice is legally required before a plan can proceed. Despite these protections, the risks are real and care providers sometimes find themselves in conversations where families have not fully understood them.
The key risks families face are the permanent reduction in estate value, the fact that the property share sold cannot be recovered, the impact on means-tested benefits if a lump sum is received, and the inflexibility of home reversion plans if circumstances change after signing. If a person enters long-term care sooner than expected, the property must be sold and the reversion provider takes their share. The family receives proportionally less than they might have anticipated. For families funding care through a combination of a home reversion lump sum and local authority support, the interaction with means-tested benefits is particularly important: receiving a significant capital sum may affect benefit entitlement, at least in the short term.
For providers bidding for supported living or residential care contracts, demonstrating awareness of how service users fund their care, including equity release products, reflects the kind of whole-system understanding that commissioners increasingly expect to see in tender submissions. The ability to support families in navigating funding options, signpost them to regulated financial advice, and articulate the funding landscape in care plans is part of what person-centred, outcomes-focused care delivery looks like in 2026.
AssuredBID
The funding landscape for social care is complex, and providers who understand it are better positioned in every commissioning conversation they enter. Whether you are bidding for domiciliary care frameworks, residential care placements, or live-in care contracts, the financial context your service users are navigating matters. Our bid management services help you build bids that demonstrate genuine depth of understanding, not just operational competence.
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