Homewise 'Home For Life' Plan

christopher_robin

Hi

Apologies for the long post but can anyone help with this query please?

We have relatives that need to move home due to health reasons. They do not have enough equity in their current property to purchase a new property outright and due to their age would probably not be considered for a mortgage.

They are looking at a scheme called 'Home for Life' offered by Homewise. The details of the scheme (copied from the Homewise website) are at the bottom of this post.

Does anyone know what the pitfalls of this scheme are? The obvious ones to me are:

1) Homewise contribute up to 40% towards the property purchase but on the sale of the property get a much larger share of the sale price (this may be an issue if the money was needed to fund relatives long term care).
2) Is there any circumstances that Homewise could force the occupants to leave the property before death / a move to long term care
3) Who would be the legal owners of the property?
4) What are the costs for setting up this arrangement?

As there is no interest to be paid on the portion of the property owned by Homewise then as far as I can see, Homewise only make any money when the property is sold which may be as long as 20-30 years after purchase. To me, this seems a long time for any company to wait for a return on their investment - so what is the catch?

Your thoughts would be appreciated.

Many thanks.



This is how the Home For Life Plan works:
• Homewise purchases the property of your choice at the market value.
• You pay a one-off price for your Home For Life Plan, which can include a discount of up to 40% of the value of the property. The amount you pay is based upon your age, gender, marital status and property criteria.
• You can retain up to 50% of the property’s future value under the Home For Life Plan, giving you the option to guarantee an inheritance for family or loved ones.
• For your protection you are granted a lease for your lifetime/s on the property, which is registered at the Land Registry by your solicitor.
• The Home For Life Plan is flexible and we guarantee that you will be able to move home again in the future should you wish.
• When you die or move permanently into long-term care, the property reverts back to the company. If you have retained a percentage of the property’s value, it is sold and your share of the net sale proceeds is paid to you or your estate.
• The Home For Life Plan is not a mortgage or loan, so there are no interest repayments or rent to pay.
• Your legal work will be conducted by an independent solicitor of your choice. Prior to completion he or she will be provided with full details of the Home For Life Plan and is required to sign a solicitor’s certificate confirming that they have fully explained it to you.

spidereyes

I can't say I've ever had any experience of this type of scheme however based on the info in your post and a quick look at the companies website I think the following

1) your parents pay a fee in order to get a discount (up to 40%) they don't disclose the fee and state it varies on numerous criteria. Be very wary as the fee doesn't state it guarantees any set discount


2) what I can see they are granted a "lifetime " lease - it doesn't state what they consider lifetime. Technically your parents have the benefit of the property for the term of the lease, I imagine the terms of the lease would contain particular clauses for forfeiture (eg in most standard residential leases there is a clause for forfeiture for non payment of service charges) it's not clear if there would be any additional fees payable throughout the "tenancy"

3) your parents will never own the property. The company will buy it an it will be legally registered in their name, they grant a lease to he benefit of your parents. It will be a landlord (freeholder) / tenant (leaseholder) relationship.

4) there are no mention of fees, I imagine the quote based on age etc. the younger they are I imagine the more they pay (based on their expected lifespan and thus a longer lease etc)

I personally would be vary wary, I wouldn't mind betting there are additional "hidden" fees such as service charge or maintenance charges. I would also consider the potential issues relating to what your parents can do at the property, there is likely to be a long list of convents (things they can and can't do) for example they may not be able to make changes to the property.
Another thing to consider (not clear from the info) who is responsible for the maintenance, what if the property needs a new roof? Are your parents expected to pay, I'm imagining the company would be but then his brings with it it's own issues in that your parents are reliant on someone else to fix things who may not be that willing to do so.



EDIT


A bit more investigating on their website seems to suggest that the tenant is responsible for all maintenance, therefore they would be expected to fork out for anything needed doing even though they are not the legal owners (I wouldn't mind betting that there are restrictions on who they can get to do work too)

Also looks like they have the "option" to get back up to 50% on sale, this isn't included automatically and I would assume they have to pay a fee just to retain a percentage.


Personally I would avoid

christopher_robin

spidereyes wrote: »

I can't say I've ever had any experience of this type of scheme however based on the info in your post and a quick look at the companies website I think the following

1) your parents pay a fee in order to get a discount (up to 40%) they don't disclose the fee and state it varies on numerous criteria. Be very wary as the fee doesn't state it guarantees any set discount


2) what I can see they are granted a "lifetime " lease - it doesn't state what they consider lifetime. Technically your parents have the benefit of the property for the term of the lease, I imagine the terms of the lease would contain particular clauses for forfeiture (eg in most standard residential leases there is a clause for forfeiture for non payment of service charges) it's not clear if there would be any additional fees payable throughout the "tenancy"

3) your parents will never own the property. The company will buy it an it will be legally registered in their name, they grant a lease to he benefit of your parents. It will be a landlord (freeholder) / tenant (leaseholder) relationship.

4) there are no mention of fees, I imagine the quote based on age etc. the younger they are I imagine the more they pay (based on their expected lifespan and thus a longer lease etc)

I personally would be vary wary, I wouldn't mind betting there are additional "hidden" fees such as service charge or maintenance charges. I would also consider the potential issues relating to what your parents can do at the property, there is likely to be a long list of convents (things they can and can't do) for example they may not be able to make changes to the property.
Another thing to consider (not clear from the info) who is responsible for the maintenance, what if the property needs a new roof? Are your parents expected to pay, I'm imagining the company would be but then his brings with it it's own issues in that your parents are reliant on someone else to fix things who may not be that willing to do so.



EDIT


A bit more investigating on their website seems to suggest that the tenant is responsible for all maintenance, therefore they would be expected to fork out for anything needed doing even though they are not the legal owners (I wouldn't mind betting that there are restrictions on who they can get to do work too)

Also looks like they have the "option" to get back up to 50% on sale, this isn't included automatically and I would assume they have to pay a fee just to retain a percentage.


Personally I would avoid

Many thanks for taking the time to post the above response - it is most useful and appreciated.


Does anyone know of any other products they could look at to purchase a property - I'm not sure how much equity they have in their current home but would assume it would be sufficient for at least a 50% deposit on a new property. Current ages - early 70's. Income not known.


Thanks again.

spidereyes

christopher_robin wrote: »

Many thanks for taking the time to post the above response - it is most useful and appreciated.


Does anyone know of any other products they could look at to purchase a property - I'm not sure how much equity they have in their current home but would assume it would be sufficient for at least a 50% deposit on a new property. Current ages - early 70's. Income not known.


Thanks again.

Depending on their income (depends if working or income through pension) there may possible be a few mortgage products around? although not my area, it may be worth speaking to an independent mortgage broker who may be able to advise further.

Depending on your area, there may be shared ownership properties or retirement properties avaliable which could possibly be an option? -your relatives would legally own a percentage of the home at least which gives a lot more protection than the above scheme.
That way they could purchase a 50% share for example and then pay rent on the outstanding share, maybe not ideal but if cannot get a mortgage then an option if their income is sufficient to cover the payments

kidmugsy

You could always try National Counties BS.