Life tenant investment properties - leasehold questions etc

SLTrooper1

Ref the question on maintenance, thought this may be useful...

All of the maintenance, upkeep and safety concerns are down to the LO. They are required to “keep the electrical wiring and all electrical and gas installations and apparatus in or exclusively serving the Property in good repair and condition and to ensure that any works carried out or additions to such installations and apparatus are carried out or provided in accordance with applicable statutory regulations “.

Pincher

The sitting tenant pays protected rent, so the yield is not high.

An interesting variation is if you live in the property yourself, so you claim £7,500 Let a Room relief.

An old lady next door in a previous house I lived in did this.
She died before the tenant did.
The son inherited the house, and finally the old tenant died, but her daughter acquired the protected status, probably due to living there for many years.
Eventually, she was forced out by bully tactics. The son sold it for peanuts 20 years ago. If he had kept it up to now, he would be loaded. Silly billy.

macca1974

This strikes me as a terrible idea to be honest. I'm fortunate enough to have inherited a portion of a property from my uncle, where my aunt has a life tenancy. She rents out the place and receives the rent and pays for the up keep etc and I will receive the property in the event of her death (hopefully in many many years time). This type of arrangement works well in this scenario as it keeps the property in the family etc, but my aunt gets the benefit of it in her lifetime.

The key point is though, it hasn't cost me a penny and won't until my aunt passes away.

If I'd paid even a reduced price for it though, then my money is tied up for the entire lifetime of the life tenant. I'm 40 and my aunt is early 70's. She is clean living and will hopefully outlive her mother who got well into her 90's. So potentially 25-30 years if my Aunt stays healthy. Whilst this will potentially add to my pension, I may well be well be close to 70 before inheriting.

If I'd paid all my savings into it (rather than inheriting), theres a chance that I'd never benefit if I don't live long enough and who knows! You can't get any money out of the property and I suppose could sell your interest, but it truly would be a sellers market.

It reminds me of an old story about a man who agreed to pay a 90 year old lady in France 2,500 francs per month until she died, after which he could move into her apartment. When he died at 77, 30 years later, she was still alive at 120, enjoying the 2,500 francs per month. This type of deal is fraught with danger and best avoided.

SLTrooper1

Hi,

To confirm, the life tenant does not pay a rent, they only cover the costs associated with maintaining the property.

Additionally there are no rights of succession.

Finally, you are free to sell your investment at any time, whether its after one year or ten. It's worth bearing in mind that as the life tenant ages, the value of your investment will increase. Add capital growth into the equation and the fact that you have purchased below the market value would, in my opinion make the investment an attractive one.

If you are in a position where you have an amount of money which you are prepared to tie up without the need for an income, these type of investments are particularly attractive and certainly not fraught with danger.

Simon_Dodd

I've been dealing in Life Tenancies for over twenty years now. They have been the best investments I've made. The first one I purchased was a terrace house in Surrey. The OMV then was just 95k I purchase it for 47,500. 50% OMV. The tenants were aged 64 & 62
Only one of the tenants remain aged 83 now. OMV now 600k, I could sell with the tenant for 420k but think I'll wait. I only viewed the property twice in twenty years. What better pension fund could I of had?