Life Tenancies, are properties that have a lifetime owner in residence, usually a person aged over sixty who has bought the right to live in that property rent free for their lifetime. They are considered medium to long-term investments and enable the investor to purchase a property significantly below vacant possession valuation.
The attraction for many investors in the sector, is the ability to purchase a property at a discount and while the lifetime owner lives in the property for their lifetime paying no rent, they are responsible for the maintenance of the property and all associated costs. When the lifetime owner permanently vacates the property either at death, or moving to long term care, the investor then takes control of the property.
Guy Charrison director of Network Auctions said: “For many property investors buying 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 and a number of family trusts have been choosing a different yet equally simple, straightforward and high yielding investment path – Life Tenancy Investments.
A number of family trusts who own portfolios have consistently over the last 40 years returned double digit returns on these residential investments.”
Unlike other property investments, Life Tenancies are exempt from the increased 3% Stamp Duty with the standard rate of Stamp Duty payable if the investment is in excess of £125,000.
Network Auction’s sale saw a number of Life Tenancies sold under the hammer including a two-bedroom house in Canterbury which sold for £52,000 and a three-bedroom semi-detached bungalow in Gravesend selling for £73,000.
Guy concluded: "Life Tenancies are gaining more in investor popularity. They can offer extremely attractive financial returns. A recent example was of a house in Sheerness in Kent purchased by two investors at £52,000, they both put in £26,000, not a huge amount of money to be buying a freehold house for; the lady occupier was 63 years of age, sadly the lady recently passed away and the investors decided to sell the property and it went under offer in less than a week at £153,000 providing a generous return for the two investors."
