Any home-reversion scheme that requires homeowners to pay rent once they become tenants in their home poses significant risks for retired people. The rent payments will have to come from the money they receive from the sale – either directly from this money, or from interest if it’s invested. If this money runs out and there’s no guaranteed tenancy for life, they face the prospect of having to move out.
Home-reversion plans have been available in the UK for some time. Many appear to include a rent-free guaranteed tenancy for life – a feature we’d like to see in plans sold here.
Our advice
- You need to get expert independent advice about a home-reversion plan – just like you do for any financial product.
- All home-reversion plans should guarantee a rent-free tenancy for life, to protect retired people. If they don't, don't sign up.
More information
- Safe Home Equity Release Plans Association (SHERPA): www.sherpa.org.nz
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