The measures enforced by the Financial Services Authority (FSA) mean providers are required to give clearer advice and support to consumers and redress problems.
Dan Waters, FSA director of regional policies, said: "Regulation of these products represents an important step in the regulation of housing finance.
"It allows the FSA to deliver a level playing field by extending consumer protection over both sectors of the equity release market.”
The Council of Mortgage Lenders (CML) recently revealed that the total value of lifetime mortgages outstanding was £6.6 billion at the end of 2006.
The number of lifetime mortgages increased last year but the value of new lending dropped, with the size of an average new loan falling from £45,000 in 2005 to £41,000 a year later.
New lifetime mortgage lending was £971 million in total for 2006 compared to £1,048 million for the previous year.
But the number of new loans did increase slightly from 23,215 in 2005 to 23,786.
CML head of policy Jackie Bennett said the trend towards small amounts on lifetime mortgages showed people were carefully considering exactly how much they needed to borrow.
"This is all good news for older people looking to release equity from their homes. Specialist advisers on lifetime mortgages are clearly beginning to adopt good practice," she added.
"The FSA's good practice advice further emphasises the special nature of this market. We expect confidence in the market to grow further, now that the FSA is also regulating home reversion schemes."
More and more consumers are looking to cash in on the value of their home by releasing equity from their property.
Two leading UK personal finance specialists believe equity release must be a family affair.
Norwich Union spokesperson Sarah Horner revealed that it was vital for borrowers to discuss equity release plans with immediate family.
And Peter O 'Donovan, mortgage manager at Bestinvest, echoed her stance, suggesting everyone involved should be well informed about what they were getting into and how they could reduce the risk of losing the property.
Horner said: "One of the areas that we do try to impress with people is to discuss it with their families.
"We always encourage people to get any dependents and anyone who might be expecting an inheritance involved, to get their opinions on it.
"Ninety nine per cent of the time I'm sure we'd find that people want their parents to enjoy their retirement time, they've earned it."
Too many consumers are being drawn in by someone "waving a cheque in front of them" and saying "if you take out this loan you can have a new car or holiday and everything will be fine".
But according to O’Donovan more solicitors in the market are now aware of the risks involved.
