What is equity release?
Equity release is a method by which older homeowners can release some of the value tied up in their home without having to move house. It offers customers the ability to withdraw either a lump sum, drawdown or an income, using the value of their Bailiwick residential property.
There are two types of ER product:
- Lifetime mortgage: The provider issues a loan that is secured against the value of the customer’s property. Traditionally, interest “rolls up” on a compounding basis and becomes payable along with capital repayment when the borrower dies or moves into long-term care. The customer retains full ownership of their home.
- Home reversion: The customer sells all or part of the equity in their home in return for lifetime enjoyment of the property. The agreement terminates when the customer dies or moves into long-term care.
Background
In December 2024, the Commission consulted on introducing a regulatory regime for Equity Release under the Lending, Credit and Finance Law. On 25 June 2025, the Commission published its response discussing the feedback received along with a redlined copy of the final Rules. Subsequently, the Lending, Credit and Finance Law (the “LCF Law”) was amended by the Policy & Resources Committee to include equity release, and associated definitions, in Part II of the LCF Law.
The amendments to the LCF Law and the accompanying Rules will come into effect on 1 January 2026. From this date firms will require a licence to provide equity release products and ancillary services.
More information on the regulatory regime for equity release can be found in the Consultation and Feedback Papers below, along with a marked up copy of the final Rules:
Equity Release - Consultation on amendments to the Lending Credit and Finance Rules and Guidance
Licensing
Firms will be able to apply for licences, via the Commission’s Applications & Authorisations Portal, as an equity release provider or provider of services ancillary to equity release, under Part II of the LCF Law, from 1 January 2026.
Existing LCF licensees will be able to apply for a “variation of activities” to add equity release to their existing licence. Other firms will need to make a full licence application.
If you are a UK equity release provider, authorised by the Financial Conduct Authority, you may be eligible for equivalence and therefore able to provide equity release to Guernsey customers without a licence, provided the customer is advised by a locally licensed advisor. Before doing so, you must notify the Commission, please contact [email protected] for a copy of the notification form. Please note that equity release advisors are not eligible for equivalence.
The application and annual licence fees will be set out in full in the Financial Services Commission (Fees and Administrative Penalties) Regulations, 2025, however the fees for equity release will be the same as those for home finance.
In order to encourage the equity release market’s growth, annual and application fees for equity release providers will be discounted by 50% for three years from 1 January 2026.
More information on applications and fees can be found from page 23 of the Feedback Paper, above.
If you have further questions about how equity release will be regulated in the Bailiwick, please contact the LCF team at [email protected].