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Lifetime Lease
Jonnie12345
Posts: 1 Newbie
Hi there,
My aunt is looking to purchase a lifetime lease on a property, releasing some of the funds from her house sale to invest to pay a small income whilst also maintaining security of tenure until she dies in her chosen property. It maximises her monthly income whilst only costing a portion of her capital, unlike an equity release mortgage. Whilst normal house sales are simple enough to price up, how can she best calculate in she is being offered an appropriate price for her lifetime lease? Obviously that capital is surrendered at death, hence the decreased payment compared to full retail price of the asset, but by how much? In essence for the seller it is a gamble similar to offering a pension - it estimates how long she will live, how much rental income they could get during that time and set a price accordingly. They gain if she dies before that estimated time, they lose if she dies after it, as pension companies do by taking your annuity and paying a pension until death. How does one calculate a fair price for a lifetime lease, please? All suggestions welcome - thank you.
My aunt is looking to purchase a lifetime lease on a property, releasing some of the funds from her house sale to invest to pay a small income whilst also maintaining security of tenure until she dies in her chosen property. It maximises her monthly income whilst only costing a portion of her capital, unlike an equity release mortgage. Whilst normal house sales are simple enough to price up, how can she best calculate in she is being offered an appropriate price for her lifetime lease? Obviously that capital is surrendered at death, hence the decreased payment compared to full retail price of the asset, but by how much? In essence for the seller it is a gamble similar to offering a pension - it estimates how long she will live, how much rental income they could get during that time and set a price accordingly. They gain if she dies before that estimated time, they lose if she dies after it, as pension companies do by taking your annuity and paying a pension until death. How does one calculate a fair price for a lifetime lease, please? All suggestions welcome - thank you.
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Comments
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Who is offering this product? ALso why bother to invest the money for a small income, when she could just put the money in a good interest account and drawdown cash as needed. I presume your Aunt is getting on in years. ALso who would be responsible for the upkeep of the property, and would she "lose" the property if she goes into ,long term care. In general a House/Flat is going to increase in value over the years as well...0
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In general a House/Flat is going to increase in value over the years as well...
Elderly people tend to let their properties age to put it politely. Potential buyers may be faced with extensive refurbishment work. I'm currently dealing with my late mothers property. She died at 89 after living in the house for 42 years. Huge potential but many potential buyers simply don't want the hassle. Prefer to spend more on a walk in style of Grand Designs property.0
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