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Deciding what to do with your home can always be challenging, whether you’re retiring or making yourself more financially secure.

Many wonder, ‘Can I sell my house and still live in it?’ if they’re considering a sale but not necessarily a move elsewhere. 

If you’re considering selling your property but don’t want to move away from the place you call home, we’ve shared suitable options for you. 

Want to sell your house but still live in it?

Can I sell my house and still live in it with Home Reversion Scheme?

Home reversion involves a property company purchasing part of your home or all of it and giving you a cash lump sum or an income, depending on your circumstances. The full home reversion plan means you’re selling the legal ownership of your home outright.

With a partial home reversion plan, you’ll sell part/percentage of your property’s title, leaving the option of selling the rest of your share at another time. 

The buyer will offer you 20%-60% of the home’s market value as this deal benefits your living situation. The older you are when starting the home reversion scheme, the higher the percentage of value you’ll receive for your home. 

Legally, you have living legal rights when agreeing to the scheme. The rental rate alters based on the company’s terms, such as a fixed rent rate, an increasable rent rate (per year) or rent-free. The buyer also cannot sell the property until you pass away, choose to move out or move into care.  

You’ll usually receive an initial lump followed by payments over time from the buyer. However, each property buyer has different terms for percentages, payments and whether you live there rent-free or not. 

What are the pros and cons of home reversion? 

Negative financial effects 

The most significant disadvantage of home reversion is the risk attached to it for your long-term financial planning, taxes, inheritance and benefits. Gaining financial advice is crucial before agreeing to home reversion as they can determine whether you will gain or lose more with this scheme.  

Home reversion isn’t a free or cheap route, as it can involve potential costs. For example, maintaining the property when you continue living there, legal fees, valuation and arrangement fees. You’ll also need to keep to the terms of the scheme, such as rent per month.  

Great for raising funds 

Home reversion has its pros for immediate funds. This scheme can prove a lump sump or immediate income if you’re happy to release the equity on your home in return for cash, either partially or in full.

If you don’t need anyone to benefit from the complete value of your home, such as your children, this scheme allows you to gain money and stability for a roof over your head. 

The pros and cons of home reversion depend on your circumstances, why you’re choosing the scheme and what you wish to get out of it. Although it can be risky as you lose your title to the property, the immediate financial benefits can be in your favour. 

Release equity within your home

Can you sell your house and still live in it with Sale-and-rent back scheme?

A ‘sale-and-rent-back’ scheme is similar to home reversion but exclusively means you sell your property to a private company or investor who will rent it back to you. Simply, you become the tenant in your former home. The ‘sale-and-rent-back’ scheme is known as ‘sale and lease back’ or ‘buy back’. 

The company buys your home at a below-market-value price, and you sign up for a tenancy agreement with them, usually for a long-term lease. The contract differs per buyer, such as the rent price and the lease length. 

Although the ‘sale-and-rent-back’ scheme is a quick win and can help you out of your current circumstance, these schemes can be risky. 

What are the risks of the sale-and-rent-back schemes? 

You could get evicted 

Selling your home through these schemes, you’ll become a tenant again and must abide by the private company’s rental rules. Usually, they’ll rent you your home back on a fixed-term tenancy. If the tenancy ends, the landlord can evict you even if you’ve done nothing wrong. There are reasons for evictions, but going against the terms of the tenancy agreement or the new landlord experiencing financial difficulties and needing to repossess means eviction is unavoidable. 

With that in mind, you may prefer selling your home on the traditional market, gaining full value and renting another property. 

You’ll sell your home for less than market value 

You can lose potential money selling to a sale-to-rent-back scheme as they usually buy homes under market value. If they offer you less than the outstanding mortgage, your mortgage lender may refuse to let you sell your home.  

Sale and rent companies may not stick to terms 

The Financial Conduct Authority (FCA) regulates sale-and-rent-back schemes, ensuring they abide by the rules. However, the FCA has previously found many issues with many of these firms disregarding the terms. 

There are several rules these companies should follow to protect the previous homeowners. They must provide fixed-term tenancy for five years, check you can afford the agreement and arrange an independent valuation of the home. Like any significant agreement, they’ll also provide a 14-day cooling-off period to help you decide. 

You may not be able to claim benefits 

The government can stop you from claiming certain benefits if they think you sold your home for less than its value through one of these sale-and-rent-back schemes. You may only be able to claim benefits, such as Housing Benefits or Universal Credit, five years after selling the home. There are circumstances when benefits are still claimable, such as if you were in financial demise and the mortgage lender repossesses. 

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Can I sell my house but still live in it with Equity Release? 

Equity release is another term for taking some cash from the value of your home and an alternative to sale-and-rent-back schemes. This scheme is available for homeowners aged 55 or over, allowing you to access a percentage of your home’s equity.

The money you receive is tax-free, allowing homeowners to live in the property and not pay any repayments on the mortgage whilst alive. The property sells when the homeowner passes, and you pay. 

Equity release has two types - home reversion, as we’ve already mentioned and a lifetime mortgage. A lifetime mortgage allows homeowners to receive cash in a lump sum that accrues interest. It’s a mortgage you won’t need to repay until the property sells or you pass away.  

Why choose equity release to stay in your home? 

Many homeowners pick the equity release option as they can enjoy the later stages of their life with more cash in their pockets. You will have consistent monthly outgoings like any homeowner but an increased disposable income, meaning you can enjoy more without worrying about money in the short term. 

However, it’s worth considering the most substantial disadvantage to equity release is not everyone is eligible to take this option. Many lenders want you to own the property outright or only have a small percentage left to pay on the home before you opt for equity release. 

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Can I sell my house and still live in it?

Deciding to sell and live in your home is a significant consideration as the options are risky for long-term financial planning.  

Equity release, home reversion and sale-and-rent-back agreements can provide financial relief if you’re struggling with your finances. Whether your outgoings have increased, you’ve lost your job, or you require more income, these methods offer money during times of financial need. 

Though these schemes help with immediate financial gain, they can affect your long-term finances. For example, inheritance for your children and the ability to invest, save money or claim benefits. You may not be able to live sustainably in the longer term. 

There are also tax implications, such as Capital Gains Tax and Income Tax. If the property you’re selling and staying in isn’t your primary residence, you may have to pay Capital Gains Tax. For some sale-and-rent-back schemes, you may have to pay Income Tax on the rental payments you make based on your overall income. 

Are you considering a quick sale on your home? We’re expert cash buyers purchasing properties for cash and handling the entire process, including solicitor costs. Our team can advise your property’s value and make the sales process quick and smooth. 

We offer a flexible approach, working on a timeline suitable for you and selling within seven days minimum. Contact our team today and see how we can help you sell your property quickly. 

Sell your house in as little as 7 days
Tom Condon

Tom Condon, one of our content writers, has fascinating expertise in sustainability in the property industry. Tom thoroughly understands the market and has experience in both residential and commercial property. He enjoys attending conferences and staying current with the most recent property trends.