Gateway Financial Advisers

The basic principle behind the reversion scheme is that all or, more usually, part of the property is sold to a reversion company (usually a bank or insurance company) who in turn grants the seller the right to continue to live in the property for the remainder of the seller´s lifetime. The purchaser releases a capital sum in return for the right to the property or a part of the property as the case may be. The capital released can be used for any purpose (and in many cases the company will insist on the occupier retaining a share in the property so that there is a greater incentive to maintain the property in good order).

Where a reversion company buys only part of a property then it remains entitled to that proportionate part of the property value at any given time. Thus if a reversion company buys, say, 50% of a property and the property increases in value from £100,000 to £200,000 the reversion company´s share will increase in value from £50,000 to £100,000.