Homewise life time lease plan for over 60’s

sje_111 · 8 October 2015 at 7:05AM

Google "home for life plan" there are several links on the very first page. There is a report from 2012 (mortgagesolutions website) regarding Arun Estates having to withdraw an advert for the scheme.

Then there are links to:

Homewise, Rooney & Co, Ward & Partners who all offer this scheme and all are owned by Arun Estates.

The common theme here is Arun Estates - they also own Cubitt & West - if you look on rightmove.co.uk you will notice that the Homewise and Cubitt adverts have the same pictures, written text etc etc for the same property, just a different price - they can't even come up with different adverts.

In my opinion, I think this is probably just legal, but morally questionable.

MartinUKL · 29 October 2015 at 6:33PM

Another way to look at this is that you are effectively paying a remaining lifetime's rent in one down payment, the longer you live, the less rent you will have paid in comparison with the period of your tenancy. Unlike rented property, you still have to stump up for any repairs/service charges regardless of the percentage you own.

spendfrith · 17 December 2015 at 10:14AM

The magic phrase here is "or go into Care". If you do not own your house you probably will not have enough money to choose your care home (or for your family to choose for you) and the element of choice makes an enormous difference, believe me. Social services will stick you in any appalling dive that is the cheapest.
So, spite your children if you must, but don't cut your nose off in the process.

bouicca21 · 17 December 2015 at 2:54PM

What happens if the property just becomes unsuitable but the person isn't at the stage of needing a care home?

spendfrith · 19 December 2015 at 6:49PM

Yes, how do you sell a lifetime interest on the open market? Answer : with great difficulty.
You would have to go back to the owner of the reversion (Homewise) and negotiate with them to buy out your lifetime interest.
You are over a barrel, so what do you think they might pay you?
Peanuts, that's what.

spendfrith · 19 December 2015 at 7:03PM

Frankly, these are awful deals. It is a legal gap in the housing market, and these people are driving a horse and cart through it.
They are advertising a phenomenal number of properties on this basis in the London area. One has to wonder where the money is coming from? We are talking billions here.
Who owns Arun?

yertiz_2 · 31 March 2016 at 5:33PM

Does anyone know someone who has actually bought through this scheme? Are the properties owned by Homewise?
Thanks.

Colonel_Tigh · 11 May 2016 at 2:04PM

Lifetime lease plans aren’t illegal, but nor are they regulated; so should be avoided and treated with enormous suspicion in my view. The kindest thing you could say is that the return on investment for the buyer in this scenario would be awful and it’s difficult to see why someone in possession of all the facts would want to consider it; there are plenty of alternatives.

The first thing to be wary of is that you are not buying the property under this arrangement; you are effectively agreeing an inflated price to rent the property from a landlord until you die. Upon death, you may bestow a nominal amount to your family, but the majority of your nest egg ends up on the broker’s bottom line as profit.

Another pitfall is the lack of regulation. Normally, when someone sells a house, they tend to ask for more than they know it is worth. Sometimes the seller will get lucky, but usually market forces intervene and they are required to accept a more realistic valuation. The problem with the lifetime lease scheme is that they don't allow market forces to moderate the seller's "optimism" to the same extent because the value of the property is protected behind a purported "discount", which makes the sale price appear more reasonable than it actually is. As there is no regulation, there is no way to prevent an inflated, exorbitant value being given to the property by the agent or seller. The level of discount offered by the broker can surely be negotiated, but you are negotiating against an erroneous baseline, so the final discount isn't really a discount at all.

There are real-life examples in my area at the moment, where a small two-bed terrace has been laughingly valued at £370k (so, about £105k more than an identical house Zoopla states was sold 6 months ago on the same street!). The indicative discount is £249k, which represents a purported discount of just over 40%; but this is incredibly misleading. An equitable discount based on true value (let’s use Zoopla as empirical evidence) should be more like £160k.

If you combine this price distortion with the fact that you won't actually own the property, (you’ll only be leasing it until you die, at which point profits go the broker), then it really calls into question the morality of such schemes, and the individuals who tout them.

AnotherJoe · 11 May 2016 at 4:41PM

Colonel_Tigh wrote: »

Lifetime lease plans aren’t illegal, but nor are they regulated; so should be avoided and treated with enormous suspicion in my view. The kindest thing you could say is that the return on investment for the buyer in this scenario would be awful and it’s difficult to see why someone in possession of all the facts would want to consider it; there are plenty of alternatives.

A couple of questions;
What alternatives would you suggest then for, lets say someone who has £100k house and would like to buy a place that costs £150k (due to move of location, different type of house, whatever). They are too old / have insufficient income to get a mortgage.

Why is the buyer concerned about return on investment? They aren't making an investment.

cells · 11 May 2016 at 5:08PM

In some ways these 'products' resemble pensions annuities and its worth looking at both

£200,000 sum of money will buy a 65 year old male an annual pension of about £12,000 a year for life. More if you have bad health or smoke or are older

That £12,000 a year could be used to rent for life and it does not tie you down to one property and you would get it until you die

Personally I dont like pension annuities or the sound of these lifetime leases. But I can see/understand that if you have no one to leave anything behind for then an annuity could make sense as in theory it would give you more disposable income and a guarantee for lifetime payments.

PLEASE READ BEFORE POSTING

Homewise life time lease plan for over 60’s

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