Unlock One of the Best Kept Secrets on How to Profit from UK Property Investing
It’s called Life Tenancy
In a nutshell;
You become a Landlord but with no rent to collect, no maintenance bills and no worries about bad tenants!
You purchase the property at a significant discount in exchange for allowing the occupant the right to live in it until their death or need for full-time residential care.
That’s it! – but there some other very useful advantages – read on to learn more.
The Lifetime Tenant buys the right to live in the property for the rest of their life or go into long term care. The investor buys the legal ownership of the property.
Typically the Lifetime Tenant pays 47% of the RICS vacant market value, the investor pays the balance of 53%.
The principal is not new;
Lifetime Tenancy has been a business model in the UK for 45 years, but previously it was an institutional investment only, and used almost exclusively by the banks and insurance companies as part of their own property portfolios.
It has been in existence since the 18th century in France but in a slightly different format.
In France for example the investor pays a lump sum to the Life Tenant in addition they also pay the Life Tenant a pension for life. In the UK the investor only pays a lump sum towards the value of the property with the Life Tenant paying the balance.
So, not new – but it has been made easily accessible by my partners who have a regularly updated pool of available property, usually in attractive and prosperous towns and cities in the UK.
They tend to get snapped up quickly, so it’s best to register your interest with me and then I’ll give you early notification of the latest availability.
Potential Tenant Profile
The life tenant is going to be someone, single, married, or possibly even a same sex couple who are over the age of 60.
They are likely to have considered selling & downsizing, along with equity release and renting in the open market.
They are buying the right to live in the property for the rest of their lives or until they go into long term care.
They are your average working people who have come to the realisation that in their current position, they would like more cash to live on in retirement.
For example the male partner may have worked in manufacturing or construction, his partner may have had a part time job in retail.
They worked hard, did OK and had busy lives bringing up two children.
They paid off their existing home and have a nice car on the drive. They have some pension and savings in place but not quite enough to live comfortably in retirement.
So they are average people who want to realise more capital.
It highlights the problem with having a high percentage of your net worth held in your main residence – you can’t sell one of the bedrooms to generate cash for a more comfortable life or better holidays.
Lifetime Tenancy is a win – win !
You might imagine that there’s a rush to become a Life Tenant in the UK?
Nevertheless there is a stringent selection process in place to make sure people fully understand the agreement.
There is a 14 stage process before they become a life tenant.
All the options available to them including selling & downsizing, Equity Release and renting on the open market.
Their family will be consulted (i.e. the potential beneficiaries of their estate) their Solicitor would also be consulted. Everyone has been kept in the loop from day one. To give you an idea of how much detail we go into when selecting a life tenant, on average it takes between 6-18 months to fully qualify a potential life tenant. In fact less than 1 in 5 people who enquire get to become a life tenant.
One perceived risk is the legalities being challenged in the courts. In the 40+ years this has been in operation in the UK, the legalities have never been challenged. Another perceived risk is if the UK property market crashes. With our upfront discount on an average property, it would take 15 years with the property market falling at 4% a yr, to wipe out the initial upfront discount on the property. The risk as we see it is, how long will the Life Tenants live before the investor can see the return on their money. Most of our investors are taking the medium to long term view so life expectancy of the Life Tenants is a fairly low risk as this would have been factored in from outset. Of course the investor is free to sell the Lifetime Tenancy property at any time, so with shorter term investors this greatly alleviates the life expectancy risk.
Some More Facts
With risk of this page being too long – please see additional bullet points and get in touch to discuss more detail.
- IHT is lowered
- Your investment is resalable
- You cannot raise a mortgage on your Life Tenancy investment
- Lower rate of SDLT – (exempt from 3% surcharge)
- You are required to have proof of funds in cash to move forward
- £300 p.a. annual management fee to manage your investment, includes property inspection etc.
Get in touch – Contact page