Can I Sell My House and Still Live in It?

When it comes to selling your house, you may not have considered whether you could sell it and remain living there. In most cases, when you sell a house, it’s to fund a move into another one after all. Occasionally, though, a sale is needed to help clear debts, support family members or help to finance retirement. Your hope might then be to avoid the stress and complications of trying to buy somewhere else.

This therefore begs the question: can you sell your house and remain living in it?
Simply put, yes! Several schemes allow you to sell your home, or a portion of it, while continuing to live there.

Home reversion plans, lifetime mortgages, sell and rent back schemes and even selling your home to your children are all possibilities. However, each comes with an array of rules you must adhere to, meaning it isn’t always a simple process.

How can I sell my house and remain living in it?

You’ll need to review the available options to see which one aligns with your goals and is perhaps the most secure method of sale.

If you wish to sell your house but stay living in it, you could take advantage of one of four options. The most suitable one will depend on your circumstances and whether you intend to leave an inheritance.

The four possible options to sell your home while remaining in it are:

• Home reversion plan
• Sell and rent back scheme
• Sell to your children
• Lifetime mortgage

Let’s look at each option in a little more detail.

Selling your house but still living in it with a home reversion plan

A home reversion plan allows you to sell all or part of your house to a home reversion lender. You receive a lump sum (typically below market value) or monthly payments based on that valuation.

You’re allowed to stay in the home rent-free until you either move out or pass away, at which point the home becomes the lender’s.

While you live there, you’re still responsible for maintaining the property and paying the bills.

This is often seen as a good option, as it provides a lump sum that can help finance later life or support your family. The biggest downside is that you’ll likely receive significantly less than the property’s market value. If you sell the entire property to the home reversion scheme, there will be nothing left to pass on to your children or other family members. Furthermore, the amount you’re offered depends on factors such as your age, insurance costs, expected upkeep and potential property market fluctuations.

If you choose to sell only part of the property, you can still pass on any gains from the unsold portion to your dependents.

It’s important to remember this is not a loan, so no debt will accrue. The home reversion provider becomes the owner of part or all of the property, meaning you may need permission to make significant changes to the property.

Selling your home but still living in it with a lifetime mortgage

A lifetime mortgage is somewhat similar to a home reversion plan, but instead of selling your home, you take out a loan secured against it. It’s available to those aged 55 or over and is typically repaid upon your death or when you move into care.

You can receive the funds as a lump sum or in instalments. Repayments are not usually required while you live there, although they can be made if you choose.

As with home reversion, a lifetime mortgage gives you access to funds for retirement, family support or home improvements. However, these mortgages are typically capped at 60% of your home’s value, so you can’t borrow the full amount.

Perhaps the biggest drawback is the interest. Because this is a loan, interest is charged and compounds over time. As a result, your dependants may end up repaying significantly more than was borrowed, potentially reducing any inheritance.

Selling your home but still living in it with a sell and rent back scheme

A sell and rent back scheme (SRB) allows you to sell your home and then rent it back from the new owner. Like home reversion and lifetime mortgages, this option gives you a lump sum to use for clearing debts, supporting family or other purposes.

Unlike the previous options, SRBs are available even if you haven’t paid off your mortgage, making them attractive if you’re struggling with mortgage repayments or debt.

However, the offer will likely be below market value. You’ll also need to ensure the provider complies with strict regulations, including affordability checks, an independent valuation and offering a fixed-term tenancy of at least five years.

It’s important to understand that you become a tenant, not a homeowner. If you breach the tenancy agreement, you could be evicted.

Selling your home but still living in it by selling it to your children

You could also sell your home to your children and continue living in it. While this may seem like a straightforward solution, it can have substantial tax implications, particularly depending on whether your children already own a property.

If your child already owns a house and plans to keep it

They’ll need to apply for a buy-to-let mortgage to purchase your home, which usually requires a larger deposit and proof that rental income will cover the repayments. You’ll remain in the house as a tenant and will need to pay market rent.

If your children sell their home to buy yours

They can apply for a standard mortgage and proceed as usual. If your mortgage is already paid off, you may choose to sell the house to them at a reduced rate. The difference between the market value and the sale price is considered a gift.

Inheritance Tax (IHT) implications

If you die within seven years of making this gift, Inheritance tax may apply to the gifted amount over the tax-free threshold. If you live beyond seven years, no IHT is due unless you continue living in the house.

If you do remain, your children may still have to pay IHT when you pass away. Whilst this can be mitigated if you pay them rent at market rates, they’ll then be liable for income tax on the rent received.

Caution: Once your children own the property, you become their tenant. If they choose to sell or evict you, you have little legal protection.

Selling your house and still living in it                   

From the above, it is certainly possible to sell your home and remain living in it. However, it’s not always a straightforward process. Selling to your children requires mortgage approval, which can be time-consuming. Home reversion and lifetime mortgages require you to meet specific criteria, and SRBs come with risks which are best approached with caution.

This may leave you with limited options. If you need to sell your home fast to support your family or clear debts, speak to us. We buy your house fast – on your terms and timeline.

We can typically complete the purchase within seven days, and with no fees to pay, you don’t have to worry about financing the sale. We even cover the legal fees. This quick route to sale gives you fast access to cash when you need it. Call us today to find out more.