Equity release: Then vs now – How equity release has changed over time

Equity release has become a popular financial tool for unlocking value tied up in your property to help fund your retirement.

Learn about the history of equity release and how it evolved into the versatile financial product it has become today.

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

Any references to tax-free or tax treatment are based on our understanding of current legislation and tax treatment at the time of writing, which may of course change in the future.

What is equity release?

Equity release is a financial solution that allows UK homeowners aged 55 and over to access tax-free cash from their home’s value without moving.

Typically available through lifetime mortgages and home reversion plans, equity release offers a way of unlocking wealth tied up in your home to help you plan for a comfortable retirement, pay off debt or spend however you like. The money can be taken as a lump sum or in regular payments and is repaid from your estate or when the property is sold.

One of the biggest advantages of equity release is that it allows you stay in your home while making the most of its financial value.

If you’re considering equity release, always speak to a financial adviser and weigh up the pros and cons before making a decision.

A brief history of UK equity release

Equity release has been around since the 1960s. It has evolved into a flexible financial solution that helps UK homeowners unlock greater financial freedom in later life.

Early equity release plans were relatively basic, involving homeowners selling their property and then leasing it back while continuing to live there. However, some homeowners experienced a dramatic decline in property value alongside increased eviction risks, forcing a change of approach.

The need for improved consumer protection eventually led to the inception of lifetime mortgages and home reversion plans in the 1990s. The 21st Century brought in further advancements with the introduction of lifetime mortgage drawdown schemes and lifetime mortgage lump sum products, giving homeowners more flexible repayment options while reducing concerns around inheritance.

A further boost to consumer protection subsequently arrived from bodies like the Equity Release Council, along with enhanced regulation from the Financial Conduct Authority (FCA). These key moments helped mould equity release into the versatile financial product it is today.

Equity release: A timeline

Equity release was the brainchild of Welsh banker, Sir Julian Hodge, in the 1960s. The original product was introduced to the market as a basic lump sum loan with interest accumulating over time at variable mortgage rates.

The 1970s and 1980s proved to be a chequered period for equity release when poor practices were not uncommon. However, by the early 1990s, the equity release market entered a new period and became more well-regulated – a theme that continues to this day.

1970s – 1990s 

The equity release market was still unregulated with no legal protections for borrowers’ assets. It gave rise to home income plans that invested the money taken out. But these were severely affected by the stock market crash and rising interest rates, leaving many customers in negative equity. As a result, many older people lost their homes to unethical lenders during the 1980s.

A turning point came with the introduction of the 1986 Financial Services Act which provided a regulatory framework for equity release.

1992 – 1997

Lenders began to introduce shared appreciation mortgages, which led to financial difficulties during the rapid house price inflation of the mid-1990s. Although home income plans were banned by regulators in 1991, the resulting scandals left a lasting negative perception of the sector.

Around this time, the landmark case Equitable Life Assurance Society vs Hyman fundamentally reshaped the retirement investment sector.

1997 onwards

Greater transparency around the equity release industry arrived due to legislation like the Retirement Income Act 2000 and the introduction of the Equity Release Council Regulations 2003.

One of the biggest developments saw the introduction of the debt cap on equity release loans. The cap set a maximum limit on the percentage of your home’s value that a lender allows you to borrow, typically ranging between 20% and 60% of the property value.

From there on, the equity release market continued to flourish, with 2025 Equity Release Council data showing continued year-on-year growth.

Why has the equity release market grown?

As mentioned, the equity release market has grown in recent times for various reasons. The growth can be attributed to many things, such as:

• People living longer: According to the Office for National Statistics, life expectancy in the UK has gone up to 83 years for females and 79.1 years for males.
• Cost of living: Pension income has not kept pace with current living costs.
• Home improvement: Older homeowners need money for home adaptations and improvements.
• Assisting children: Homeowners may want to access value in their home to help their children get on the property ladder.
• More regulation: Tighter industry regulations and customer protections, such as the No Negative Equity Guarantee.

These demographic changes in UK population are likely to have influenced the increasing popularity of equity release products and later-life mortgages. However, these demographics could easily change again, affecting future development of the equity release market.

What is the future of equity release?

The future of equity release is forever changing in line with new products, trends and regulations.

In 2026, equity release trends include greater flexible repayment options, green mortgages, expanding drawdown options, regulation updates, tech-driven advice and, perhaps most importantly, increasing demand.

Numerous factors shape the future of equity release, including:

• Rising life expectancies, increasing property values and regulatory changes all influence the equity release market, leading to more flexible, consumer-focussed products with lower interest rates.
• Product innovation means older homeowners have safer ways to access wealth tied up in their property and enjoy greater financial security.
• Future equity release is likely to focus on an increase in multi-generational living, advances in technology, a stronger emphasis on responsible lending and even further transparency. 

Essentially, equity release has evolved from an unregulated product into a fully-regulated market valued in the billions. Even so, borrowers should be aware of the potential risks of equity release and using their home as collateral.

Even amid fluctuating interest rates and ongoing uncertainty, the equity release market has further potential to grow, though like any investment, outcomes cannot be guaranteed. Those affected by mis-sold equity release products should always seek guidance from a legal expert to explore their options.

What equity release products are available?

There are two main types of equity release: lifetime mortgages and home reversion plans. In both cases, these are repaid when you pass away or move into long-term care.

1. Lifetime mortgages

A lifetime mortgage is a loan secured against your property, allowing you to live in your property while accessing tax-free cash to support your retirement.

The key features of lifetime mortgages include:

• You continue to live in your home and remain the legal owner.
• You’re responsible for the upkeep of the property, including maintenance and insurance.
• The loan is typically repaid only when the last borrower dies or enters long-term care.
• Interest is added to the loan and compounded over time, meaning you pay interest on both the original amount and accumulated interest. This can significantly increase the total amount owed.

2. Home reversion plans

Home reversion plans involve selling all or part of your property to a home reversion provider in exchange for a tax-free lump sum or a series of payments. With home reversion plans:

• You sell some or all your home and no longer own it. However, you can continue living there for life, either rent-free or for a small pre-agreed payment, depending on the plan.
• When the last borrower dies or moves into long-term care, the property is sold, and the proceeds are divided according to the agreed terms.
• You’re still responsible for the property’s upkeep and insurance. Some providers carry out spot checks to ensure it’s being properly maintained.

Please note: LV= does not currently offer advice on home reversion plans

Do you need advice about equity release?

We provide an impartial, fully FCA-regulated equity release advice service to help you make an informed decision. For more details, speak to one of our equity release advisers today or request a call back at a time that suits you.