Property Consultancy : Chartered Surveyors, Valuers & Auctioneers
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.
A Life Tenancy is a medium to long-term property investment with the potential for multiple factors to drive capital growth. Essentially, it allows you to purchase residential property at significantly less than the RICS vacant possession valuation: discounts are typically upwards of 40%. Life Tenancy properties are occupied by a Lifetime Tenant: a person aged over sixty who has purchased the right to live in the property rent-free until they pass away or move into permanent long-term care. At this point, the Life Tenancy ends and the property is yours to do with as you wish.
The Life Tenant is legally responsible for all maintenance and upkeep costs in the first instance
This unique home purchase option gives people aged over sixty the chance to buy a property that may otherwise be outside their budget and live peacefully and securely in this property for the rest of their lives.
Life Tenants are able to safeguard up to 50% of the property’s future value when they set up the Life Tenancy. If they’ve chosen this option, the investor’s purchase price is reduced to reflect the value and percentage of the property being purchased. As an investor, you would still be registered as the property’s owner at Land Registry.
Life Tenants are entitled to the peaceful enjoyment of the property, and as an investor it is your responsibility to ensure that they can achieve that. There are other responsibilities, such as ensuring the buildings insurance is maintained and liaising promptly with the Life Tenants when necessary, but these responsibilities can be completely taken care of by our property management service. All Life Tenancy investments include a property management package as standard at a small annual fee. This ensures that all of the investor responsibilities are managed and helps to maximise potential investment returns.
Property Management Includes
Provider:
Life Tenant:
Investor:
Provider:
Life Tenant:
Investor:
Provider:
Life Tenant:
Investor:
At the end of the Life Tenancy, you will benefit from exposure to House Price Inflation on the full value of the property purchased, despite having purchased this property at a discount. As a guide, here’s how house prices have changed over the past twenty years:
% Increase in house prices in the past 20 years
% Average annual increase
Whilst a Life Tenancy investment provides disproportionate exposure to the potential benefits of House Price Inflation, it also provides protection from the potential impact of sharp or long-term deflation.
70 years old – Single Male
15 years – Assumed tenancy period
£111,000 – Investment purchase price
£200,000 – Vacant possession value
* Source: Land Registry data 2022, properties in England and Wales
** Gross loss does not take into consideration sales, legal or any other fees or costs. It also assumes the Life Tenancy has ended.
As the Life Tenant increases in age, the investment increases in value. Simply put, the older the Life Tenants are, the higher the likelihood that the property will return to you, the investor, hence the higher investment value. Similarly, any improvements made to the property by the Life Tenant, such as decoration or renovation, may also contribute to a rise in investment value. Without allowing for the impact of House Price Inflation or Deflation, there’s an opportunity for significant capital growth on the initial investment and the potential to resell the investment at any time.
The examples below are based on a £250,000 RICS vacant possession valuation and an assumed 4% annual House Price Inflation. They show how your initial investment and your returns vary depending on the length of the Life Tenancy, percentage of the property owned and the age of the Life Tenants.
Example One – Male 62 & Female 65
Investment Price: £102,056
Ownership: 100% or £250,000
Discount: £147,944 or 59%
| House Price Inflation | Total Capital Growth | ROI | |
| 5 Years | £54,163 | £202,107 | 198% |
| 10 Years | £120,061 | £268,005 | 263% |
| 15 Years | £200,236 | £348,180 | 341% |
| 20 Years | £297,781 | £445,725 | 437% |
Example Two – Male 75 & Female 75
Investment Price: £144,852
Ownership: 100% or £250,000
Discount: £105,148 or 42%
| House Price Inflation | Total Capital Growth | ROI | |
| 5 Years | £54,163 | £159,311 | 110% |
| 10 Years | £120,061 | £225,209 | 155% |
| 15 Years | £200,236 | £305,384 | 211% |
| 20 Years | £297,781 | £402,929 | 278% |
Example Three – Male 69
Investment Price: £66,250
Ownership: 50% or £125,000
Discount: £58,750 or 47%
| House Price Inflation | Total Capital Growth | ROI | |
| 5 Years | £27,082 | £85,832 | 130% |
| 10 Years | £60,031 | £118,781 | 179% |
| 15 Years | £100,118 | £158,868 | 240% |
| 20 Years | £148,890 | £207,640 | 313% |
Life Tenancy investments can be traded between investors before the asset reverts. At this point, the investment valuation would be based on the following factors:
The Life Tenancy ends when the Life Tenants no longer live permanently at the property. This can be triggered by one of three events: the Life Tenants moving into permanent care, passing away or otherwise choosing to end the Life Tenancy. At this point, the property is yours to do with as you wish.
The provider is the investor which purchases the property and gives rights to the Life Tenant to live in the property for the rest of their lives in exchange for a significant discount.
The Life Tenant is the party whom will have the right to live in the property for the rest of their life or until they permanently vacate the property. They are either singles or couples aged 60 or above.
It’s not too dissimilar to Equity Release because the Life Tenants often free up equity from the previous home. However, in addition to freeing up equity they are able to move into a new home of their choice and never have to worry about rental or mortgage payments.
Absolutely not. There is a strict process of qualifying the would-be tenants to ensure they and their family members fully understand the legal aspects and implications of the transaction.
The share represents the percentage of equity that the investor will purchase in the property. Some Life Tenants prefer to hold a small percentage of equity in the property to ensure funds being passed down.
It is highly unlikely you can obtain a mortgage for a Life Tenancy investment.
The prices are fixed due to the discounts already in place and the speed of each sale.
With Life Tenancy Investments, the investor will become the legal owner. This will be legally binding and be registered with the Land Registry. This will all be handled by the appointed solicitor.
The levels of tax payable would be dependent on your unique circumstances and professional advice should be sought.
Yes, however many of the investments offered will be below the threshold of £125,000 and so there would be no stamp duty to pay. In addition, life tenancies are exempt from the additional stamp duty surcharge on secondary property.
The Life Tenants are responsible for all upkeep and maintenance of the property.
If one of the Life Tenants remarries, they must first have the provider’s written permission that their new partner can move in and the new partner must sign a waiver to confirm they have no legal right to remain in the property once their partner has permanently vacated.
Our experts, whom have 40yrs experience, will be qualifying all potential Life Tenants. Providers may visit the property once every three years.
The Lifetime Tenancy Investments (LTI Hotlist) is an email list that we use to send investors the properties that become available for investment. It is the only way investors can be informed.
Essentially none. We provide a management service which means we provide you with an annual report on occupancy, condition and market value.
The ownership of the property will go through the regular probate process specific to the owner’s circumstances.
The Life Tenants will have a legal obligation to maintain the property to a high standard. Failure to do so could mean the termination of the plan. However our management service ensures this would not happen.
The management team are in frequent contact with the Life Tenants and their families. Should any change in the tenancy occur, they will inform the provider.
As with all investments there are risks involved. However, in the 40+ years this model has been operating, there has never been a situation where the contents of legalities have been challenged. The only uncertainty is the timeline of which the life tenancy will last.
Because of the enormous discount from the initial purchase price, it’s unlikely that the value of the property could decrease in value in excess of the initial discount.
The product is not regulated; we do not need to be regulated to create them and you do not need to be regulated to own them.
The Royal Institution of Chartered Surveyors is a professional body that accredits professionals within the land, property, construction, and infrastructure sectors worldwide. Each property is supported by independent valuations by certified RICS surveyors ensuring the accuracy.
Yes, you are entitled to have a second surveyor value the property, however this will be at your own cost.
Due to the demand and speed of each Life Tenancy Investment we charge a fee to ensure commitment to the purchase.
Every Life Tenancy agreement has a standardised contract. You are more than welcome to view the template before reserving. Once you reserve you will receive your specific contract.
We can recommend a solicitor that has previously exchanged on many Life Tenancy Investments.
No, the Life Tenant is required to purchase building insurance.
Yes, the properties can be owned by an SPV, however please consult legal advice on this subject.
Whilst every effort has been made to ensure the accuracy of the information in our frequently asked questions and answers we must inform all parties to not accept every statement as legally binding. When investing into a Life Tenancy, a contract will be produced with full details of the agreement between both parties, this will hold the legally binding words. Guy Charrison works with Homewise Limited (Company number 04256355) who will manage the property and liaise between each property’s Provider and Life Tenants.
This document is for the use of the addressee only. Recipients are required to keep the contents of the information contained in this document confidential. It may not be copied or distributed or otherwise made available by any recipient without the express consent of Guy Charrison Property Consultancy (“the Company”).
To the best of the knowledge and belief of the Company, which has taken all reasonable care to ensure that such is the case, the Company believes the information contained in this document is in accordance with the facts and does not omit anything, which is likely to affect the importance of such information. Statements of belief, projections, forecasts and expectations represent the Company’s own assessment and interpretation of the information available to it at the date of this document.
These assessments and interpretations are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors beyond the Company’s control and as such the Company does not represent that the statements, views, projections or forecasts are factually correct at the time of publication or at any other date.
The recipients must determine themselves what reliance they should place on the statements, views, projections and forecasts.
We recommend you to carry out your own due diligence and not solely rely on the information provided.
Neither the Company, nor the proposed arrangement concerning the property which is the subject of this document, are regulated by the Financial Conduct Authority.
You should carefully consider whether you wish to purchase a property and you should carefully consider seeking independent financial advice from your financial adviser prior to making any investment.
Dated: November 2022
If there are any further questions, please get in touch