Home Reversion Schemes – Why Am I Still Responsible for the Maintenance of my House if I No Longer Own it?

Home reversion plans come with certain caveats which potential applicants should be aware of before committing a lifetime to them. In essence, with a home reversion scheme, you sell a percentage value of your property to a home reversion provider in exchange for tax free cash. Because home reversion plans do not involve taking out a loan, but rather selling the property, there are no monthly repayments or interest payments. However, there are expenses to think of when considering home reversion and these include costs of upkeep and maintenance.

When you sell a percentage of your property to a home reversion provider in exchange for cash lump sum, you transfer the ownership of that proportion of the property to the provider. However, you retain the right to live in the house rent free for as long as you live by use of a lifetime tenancy agreement. The house is sold when you die or move into care, and the provider gets their share of the sale value.

As such, if you decide to release maximum value and sell 100% of the property value to the provider, you continue to live at the property but do not have ownership of any percentage of the house. Irrespective of the percentage you sell to the provider, any costs of up keep and maintenance of the house are to be met by you.

While this may seem counterintuitive, the fact is that because you continue to live at the property, the responsibility of maintaining the house and keeping it in good condition lies with you. When you sign a contract with the home reversion provider, you agree to keep the property at a certain standard of upkeep. There is a condition in the contract, wherein the applicant agrees to pay for the maintenance and repairs to the house.

When you die or move into permanent care and the plan ends, the provider assesses the condition of the property. If there are any major problems with the condition of the property at this time, or the property has not been maintained to a certain standard that is expected, the expenses to repair this must be met by you or your beneficiaries. This means that the money that is used for this work is money that would otherwise have gone to your beneficiaries.

When thinking of home reversion plans and assessing whether they are suitable for you – it is important to consider the lifelong responsibility of meeting any maintenance and repair costs despite losing ownership of the house.