Why are investors buying Life Tenancies?
Life Tenancies provide the perfect investment for any portfolio. Whether it be a top up for a pension pot, a gift for a child or a future Buy to Let, more and more investors are seeing this as an increasingly profitable investment over more traditional property investments. Below are just a few bits of information on Life Tenancies and why they are attracting investors in their droves.
- Life Tenancies are available, on average, at 47% below the RICS valuation.
- Unlike other property investments, Life Tenancies are exempt from the increased 3% Stamp Duty. You will only pay the standard rate of Stamp Duty if your investment is in excess of £125,000.
- The property will benefit from exposure to House Price Inflation on the full value of the property despite having been purchased at a discount. Whilst a Life Tenancy investment provides disproportionate exposure to the potential benefits of House Price Inflation, it also provides protection from the potential impact of sharp or long-term deflation.
- The example below is based on a £250,000 RICS vacant possession valuation and an assumed 4% annual House Price Inflation:
Investment price £132,500
Discount £117,500 (47%)
Property’s market value in 10 years £370,061
Property’s market value in 20 years £547,780