Love investing in property but bored of buy-to-let? Choose a Life Tenancy Investment, now available to UK individuals
With the UK economy back on its feet and the housing market booming, there’s never been a better time to invest in bricks and mortar, especially for pension provision.
For many individuals purchasing a traditional buy-to-let property has been the investment of choice but for years some of the largest financial institutions and listed property companies have been choosing a different yet equally simple, straightforward and high yielding investment path – Life Tenancy Investments.
Life Tenancy Investments have long been the preserve of institutions such as Grainger PLC (the largest owner of residential property in the UK), William Pears, Mountview Estates and Santander but now, well respected property expert Guy Charrison, in partnership with Wakeley Residential Investments Limited, is delighted to be able to bring this attractive opportunity to the everyday property investor.
So in a nutshell, what is a Life Tenancy Investment?
Life Tenancy Investments offer a simple and straightforward way to invest for your and your family’s future and are a viable alternative to buy-to-lets.
In return for the freehold or leasehold interest in their property being sold to an investor the occupier receive a lease for their lifetime with no rent payable. The occupier maintains and insures the building. The property then fully reverts to the investor on death or moving to long term care.
What makes a Life Tenancy Investment an attractive property investment?
The investor has the opportunity to purchase a property for a fraction of its current open market value offering superb potential for capital growth, especially in a rising market such as today. The investment will have a Life Tenant in residence at completion who will remain in the property until they either pass away or move into full time residential care.
The Life Tenant will receive an agreed sum of money up front in return for ownership for them to do with as they please.
How does it work in practice?
A property open to a Life Tenancy Investment is made available to buyers at a substantial discount to the open market value. Investors are able to purchase the property and will be the named owners on the title deeds. The ownership will be subject to the lifetime lease granted to the Life Tenant.
The property continues to be occupied by the Life Tenant who is aged 60 years or over. The Life Tenant has a lifetime lease on the property entitling them to live in the property rent free until they either pass away or permanently move into long term care.
At the point that the Life Tenant vacates the property permanently, the Life Tenancy ends and the investor has vacant possession of the property making them free to sell the property and realise their investment.
The investor is entitled to all the sale proceeds unless the Life Tenant has retained a percentage of the property value in which case the investor will send the Life Tenant’s proportion of the proceeds to them once the sale completes. If the Life Tenant has retained a percentage this is reflected in the investor’s purchase price of the investment.
What are the Investor’s main legal obligations?
To allow the life tenants to live peacefully and quietly in the property for the rest of their lifetime rent free.
What are the Life Tenant’s main legal obligations?
During the Life Tenant’s residence, they will repair and maintain the property as well as covering all associated expenditure including maintenance and repairs, utility bills, council tax and any service charges or ground rent (if applicable).
What happens when the Life Tenant vacates the property?
At the point the Life Tenant vacates the property permanently the property is the investors’ to do with as they wish. They can choose one of the following options:
ü Sell the property and realise their investment with potential substantial capital growth
ü Rent out the property and enjoy the monthly income obtaining a high return on capital as the property was purchased at a Life Tenant price
ü Move into the property and live there
ü Early exit opportunity – Investment can be resold to an alternative investor at an earlier stage if required
Why has Guy Charrison personally invested in Life Tenancy Investments for over 20 years?
“They are easy to manage as the occupier maintains and insures the building and are an ideal investment for you, your children or grandchildren. Historically these Life Tenancy Investments have offered a fantastic return on initial investment – they certainly have for me! The investment is growing in value due to the increasing age of the Life Tenant in addition to any capital growth – the ‘double line’ growth opportunity.
“Ideally, to maximise profit, Life Tenancy Investments should be purchased as medium/longer term investments but I also am aware from first-hand experience that investor’s needs may change over the years and there can be a requirement to realise the investment before the Life Tenant permanently vacates hence investments can be resold to an alternative investor at an earlier stage if required.”
On the market: Life Tenancy Investment opportunity in Canterbury, Kent
Property type: 2 bedroom terraced house
Independent Valuation: £120,000
Investment / Purchase Price: £54,000
Value of Investment: £120,000
Discount: £66,000
Percentage Offered: 100%
Investment Terms: Life Tenancy
Tenancy Details: Male 68 & Female 69
Tenure: Freehold
For more details contact Guy Charrison Property Consultancy on 01344 851 007 or visit www.guycharrison.com.