For a long time, large financial institutions have been investing in properties through a simple yet high yielding path – life tenancy investments. This enables them to purchase a property from the owner for a fraction of its current value, but not to actually obtain it until the owner has died or moved out. However, recently this opportunity has been extended to the everyday property investor.
Investors purchase the property at a discounted price and then become the acquire ownership status. The ‘Life Tenant’ on the other hand (usually 60 or over), has a lifetime lease on the property until they pass away or decide to move out. Once the Life Tenant moves out, the investor has possession of the property.
Currently, whilst the market is growing at a rapid rate, this sort of investment offers a great potential for capital growth. The tenant will receive money upfront in return for the investor’s right to do as they please once the tenant no longer lives there.
However, although this seems to be a pretty advantageous system, there are losers – the ‘Life Tenant’s’ kids who won’t be benefitting from an inherited property. This means that more from the younger generation will be left to climb onto the property ladder alone.