Lifetime Lease

[beefer]

I'm seeing more properties offered with a Lifetime Lease.  They are listed on Rightmove as a normal purchase but then there is a matching Lifetime Lease add where you can pay less and live there till you die.

Are these houses being bought-up by companies who can afford to wait years to get the property back?  If more houses are being bought by companies won't every private buyer get eventually priced out?

e.g. House 1

https://www.rightmove.co.uk/properties/136156073#/?channel=RES_BUY

https://www.rightmove.co.uk/properties/136143539#/?channel=RES_BUY

House 2

https://www.rightmove.co.uk/properties/134205005#/?channel=RES_BUY

https://www.rightmove.co.uk/properties/134174933#/?channel=RES_BUY

These were just the ones listed today.  There are many more examples in Herne Bay, Kent.

Edited June 16, 2023 by beefer

[AlfredTheLittle]

58 minutes ago, beefer said:

I'm seeing more properties offered with a Lifetime Lease.  They are listed on Rightmove as a normal purchase but then there is a matching Lifetime Lease add where you can pay less and live there till you die.

Are these houses being bought-up by companies who can afford to wait years to get the property back?  If more houses are being bought by companies won't every private buyer get eventually priced out?

e.g. House 1

https://www.rightmove.co.uk/properties/136156073#/?channel=RES_BUY

https://www.rightmove.co.uk/properties/136143539#/?channel=RES_BUY

House 2

https://www.rightmove.co.uk/properties/134205005#/?channel=RES_BUY

https://www.rightmove.co.uk/properties/134174933#/?channel=RES_BUY

These were just the ones listed today.  There are many more examples in Herne Bay, Kent.

I only looked at one, but the lifetime lease on that one is only for over 60s, so won't be a long wait to be able to sell it again. The price probably won't be much less than the cost of buying outright (depending on age and health) and on top of that you've probably got large annual charges until you die. I doubt the sellers will be losing out in the short term for long term gain, it's just more of a rip off.

[apples]

13 hours ago, beefer said:

There are many more examples in Herne Bay, Kent.

Also other areas. Same company*, different branch, West Midlands:

https://www.rightmove.co.uk/property-for-sale/find/Homewise/Covering-West-Midlands.html?locationIdentifier=BRANCH^260495&includeSSTC=true&_includeSSTC=on (454 results)

Do they always have normal listings? I sometimes see only the lifetime lease, but I have an upper price limit on my searches.

Wouldn't touch with a barge pole. I don't identify as "aged 60 or over", mind.

* Is it only Homewise or are there others?

Edited June 17, 2023 by apples

[reformed nice guy]

If there is a growing population of 60+ people with large pension lump sums and no children then this could be a growing sector.

Gives them a fancy house but gives more immediate cash flow for cruises etc

[Boon]

1 hour ago, apples said:

Also other areas. Same company*, different branch, West Midlands:

https://www.rightmove.co.uk/property-for-sale/find/Homewise/Covering-West-Midlands.html?locationIdentifier=BRANCH^260495&includeSSTC=true&_includeSSTC=on (454 results)

Do they always have normal listings? I sometimes see only the lifetime lease, but I have an upper price limit on my searches.

Wouldn't touch with a barge pole. I don't identify as "aged 60 or over", mind.

* Is it only Homewise or are there others?

IMO this has been happening for ages. At least I've seen it for a long time in my search areas. Some places have the option, some don't.

When I sold the EA asked me if I wanted it on my listing. Explained it was very unlikely that someone would buy it using that, it gives a separate listing using the same details but it was no extra charge, and 'you never know' etc. Didn't mention any downsides.

I do presume that if sold down this route the EA would get the same fee but maybe less work as there is more in it for the other company and they would be keener to complete.

Maybe its becoming more prevalent/an easier sell now in a tougher market.

[VeryMeanReversion]

I'd prefer to offer lifetime leases for the vaccinated.

Sign up with me and get two more free.

[Frank Hovis]

Interesting.

The house is actually for sale for £875k (not a typo, look at the last line in the EA quote below).

 

The vast majority of younger workers cannot afford that price.

If now older workers and wealthy retirees cannot afford that price either then you have to find a way of selling the house without requiring £875k to be paid and without cutting the price.

Shared ownership - buying a percentage of the house - has been around for decades and this now brings in a limited time dimension to the purchase where you buy the whole lot but only have it for a limited time.

It is one way that existing high open market prices can be maintained even if nobody can actually afford them because they will act as reference points.

That house will remain "worth" £875k even if nobody ever buys it for £875k.  As long as that £875k is the agreed valuation then someone pays £87.5k for 10% of it on a shared ownership or £500k for a lifetime lease.

It is a way of preserving underlying value at a time when nobody can actually afford to buy an £875k house.

 

Parsonage Road, Herne Bay, Kent

 

 

Guide Price

£578,000

Through the Home for Life Plan from Homewise, those aged 60 or over can purchase a Lifetime Lease with a one-off payment to become the Lifetime Lease owner of this property. The cost to purchase the Lifetime Lease is always less than the full market value. The saving can vary from 8.5% to 59%* depending on your age, personal circumstances and property criteria. The above guide price is the estimated price payable by a 69-year-old single male. For an indication of what you could save, please use our calculator on the Homewise website (see link below). For more information or a personalised quote, just give us a call. Alternatively, if you are under 60 or would like to purchase the property at the full market value of £875,000, please contact Wards.

https://www.rightmove.co.uk/properties/136156073#/?channel=RES_BUY

 

The big question for me with this would be waht are the sell on options.  That is a big two storey house and may become too much for a person as they age.

Would wanting to move out constitute surrender of the lease or coudl you agree a percentage unexpired and sell back.

It's a tricky one and I suspect that the dice are severely weighted against the buying individual.

If I had limited funds then I would maybe use that method to buy myself a small bungalow on the cheap but I can't see that it is a good idea for buying a big house.

[Wight Flight]

3 hours ago, Frank Hovis said:

Interesting.

The house is actually for sale for £875k (not a typo, look at the last line in the EA quote below).

 

The vast majority of younger workers cannot afford that price.

If now older workers and wealthy retirees cannot afford that price either then you have to find a way of selling the house without requiring £875k to be paid and without cutting the price.

Shared ownership - buying a percentage of the house - has been around for decades and this now brings in a limited time dimension to the purchase where you buy the whole lot but only have it for a limited time.

It is one way that existing high open market prices can be maintained even if nobody can actually afford them because they will act as reference points.

That house will remain "worth" £875k even if nobody ever buys it for £875k.  As long as that £875k is the agreed valuation then someone pays £87.5k for 10% of it on a shared ownership or £500k for a lifetime lease.

It is a way of preserving underlying value at a time when nobody can actually afford to buy an £875k house.

 

Parsonage Road, Herne Bay, Kent

 

 

Guide Price

£578,000

Through the Home for Life Plan from Homewise, those aged 60 or over can purchase a Lifetime Lease with a one-off payment to become the Lifetime Lease owner of this property. The cost to purchase the Lifetime Lease is always less than the full market value. The saving can vary from 8.5% to 59%* depending on your age, personal circumstances and property criteria. The above guide price is the estimated price payable by a 69-year-old single male. For an indication of what you could save, please use our calculator on the Homewise website (see link below). For more information or a personalised quote, just give us a call. Alternatively, if you are under 60 or would like to purchase the property at the full market value of £875,000, please contact Wards.

https://www.rightmove.co.uk/properties/136156073#/?channel=RES_BUY

 

The big question for me with this would be waht are the sell on options.  That is a big two storey house and may become too much for a person as they age.

Would wanting to move out constitute surrender of the lease or coudl you agree a percentage unexpired and sell back.

It's a tricky one and I suspect that the dice are severely weighted against the buying individual.

If I had limited funds then I would maybe use that method to buy myself a small bungalow on the cheap but I can't see that it is a good idea for buying a big house.

Wouldn't it be better to just buy the place and then do an equity release?

 

[Frank Hovis]

9 minutes ago, Wight Flight said:

Wouldn't it be better to just buy the place and then do an equity release?

 

 

From what I've read equity release is worse as the way that it compounds the interest will take away the whole lot so if you live long it will cost you more.

Buying and then selling with reservation of title is maybe better as you get a big lump back without that compounding making it worse the longer that you live.

Obviously what matters is how much you get either way so I'm not saying that you're wrong but my feeling is that taking the latter course would be the better overall deal.

[Wight Flight]

9 minutes ago, Frank Hovis said:

 

From what I've read equity release is worse as the way that it compounds the interest will take away the whole lot so if you live long it will cost you more.

Buying and then selling with reservation of title is maybe better as you get a big lump back without that compounding making it worse the longer that you live.

Obviously what matters is how much you get either way so I'm not saying that you're wrong but my feeling is that taking the latter course would be the better overall deal.

My understanding of equity release is your remaining equity will dwindle over the years to zero and then you stay until you die. If you happen to die a bit earlier than planned then there may be some equity left.

With the lifetime lease there is zero equity from the day you buy it. If you die the day after, tough. You lost the lot.

[Frank Hovis]

3 minutes ago, Wight Flight said:

My understanding of equity release is your remaining equity will dwindle over the years to zero and then you stay until you die. If you happen to die a bit earlier than planned then there may be some equity left.

With the lifetime lease there is zero equity from the day you buy it. If you die the day after, tough. You lost the lot.

 

Yes, agreed.

Hence my "third way".

[Wight Flight]

3 minutes ago, Frank Hovis said:

 

Yes, agreed.

Hence my "third way".

I would add that equity release isn't always bad. In laws did a small amount (£30k i think) a couple of years ago but they pay the interest every month and got a 3% lifetime fix.

[Frank Hovis]

1 minute ago, Wight Flight said:

I would add that equity release isn't always bad. In laws did a small amount (£30k i think) a couple of years ago but they pay the interest every month and got a 3% lifetime fix.

 

Thta's a decent deal tbf.

I don't think many people are that switched on.

My aunt, aged about nineties, decided to go into a McCarthy Stone type (may have even been McC & S) retirement flat after her husband died.

Most people buy these new off plan and then find that the resale value is in the range of 40% - 60% of the price they paid new, hence the clever option being to buy second hand and not be taken in by all the marketing of the new flats.

She however took her own third way and found someone, presumably a buyer from new who didn't want to realise that cpaital loss, and wanted to rent it out which seems the perfect deal for her situation as the family capital from their house goes to her children.

It's good to see elderly people refusing to be ripped off.

[BoSon]

I expect the normal sale valution is somewhat optimistic to make the lease option more attractive, so they are quids in whichever type of mug turns up.