The decision to buy one’s own home often involves exhausting any available savings opportunities. This means the property is the owner’s only significant private old-age provision. As a result, some homeowners find themselves wondering at some point: Does my need for more financial flexibility mean I need to sell my property? For someone in such a situation, a partial home reversion plan can seem like a good alternative. There is currently a great deal of advertising for such offers targeting the age group 50 plus.

There are two purported advantages that make a partial home reversion plan seem attractive: the prospect of quickly obtaining a large amount of money – the partial sale price – and the possibility of continuing to live comfortably at home, without restrictions, despite having sold part of your home. The other side of the coin: a partial home reversion plan is speculative and entails significant risks. The rental fee you will have to pay to the co-owner of the property is considerable. If you should no longer be able to pay the fee, you may be at risk of having to move out against your will. The same could happen to you if the company that has bought part of your home becomes insolvent. What is more, it is very likely that you will bear the property’s running costs in full – even though you share ownership with another party.

Furthermore, the final financial outcome of the partial sale will only become apparent long after the contract is concluded: when the property is bought back or sold in its entirety. The company that previously bought a percentage of your property is generally entitled to a minimum amount of the proceeds in both cases. For you, however, it is a different story: the amount of money you will have to put up to buy the property back, or how much you will receive for your share if the property is sold in full to a third party, depends on how your property’s value appreciates or depreciates. The interdependencies are difficult to understand.

“A partial home reversion plan is rarely the best solution for home owners”, says Dr Thorsten Pötzsch, BaFin’s Chief Executive Director for Securities Supervision and Asset Management. A partial home reversion is risky and could become expensive. “From a consumer protection viewpoint, I can only urge consumers not to blindly trust the omnipresent advertising claims for partial home reversion”, Dr Pötzsch explains.

For this reason, the BaFin website now features comprehensive information on this topic, including a checklist und example calculations. Exciting insights into the consumer centres’ perspective and advisory practice regarding partial home reversion can also be found in the latest episode of BaFin’s consumer protection podcast (“Immobilien-Teilverkauf: selten die beste Lösung”, only available in German). In this conversation, Katharina Lawrence, consumer protection expert at the Frankfurt consumer centre, speaks with Dr Sabine Reimer, Head of Division in consumer protection at BaFin. They discuss aspects of this topic as well as specific examples of real situations.