a guide to life wakeley residential investments...future value // pay off mortgages, loans and other...

Welcome to Life Tenancy Investments

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A guide to LifeTenancy investment

Wakeley Residential Investments01903 276588

f Wakeley Residential Investmentst @WakeleyInvestl Wakeley Residential Investments

2 3Capital at risk. The value of the investment may go up and down, so may House Price Inflation. Statements of belief, projections, forecasts and expectations represent the Company’s own assessment and interpretation available to it at the date of this document. We recommend you carry out your own due diligence and not solely rely on the information provided.

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Rewrite the rules on property investment

What is a Life Tenancy investment?

How and why are Life Tenancy investments created?

Your responsibilities

Purchasing process overview

House Price Inflation and Life Tenancy

Protected returns

Capital growth

Investment illustration

Resale opportunities

End of Life Tenancy

FAQs

Next steps

General provisions

A Life Tenancy is a medium to long-term property investment with the potential for multiple factors to drive capital growth. Essentially, it allows you to purchase residential property at significantly less than the RICS vacant possession valuation: discounts are typically upwards of 40%.

Life Tenancy properties are occupied by a Lifetime Owner: a person aged over sixty who has purchased the right to live in the property rent-free until they pass away or move into permanent long-term care. At this point, the Life Tenancy ends and the property is yours to do with as you wish.

What is a Life Tenancy investment?

the Lifetime Owner is legally responsible for all maintenance and upkeep costs in the first instance // low-risk asset class // the average discount is 47% off the property’s RICS vacant possession valuation // exempt from the 3% stamp duty surcharge on second homes*// you would be the registered owner of the property at Land Registry

* This is correct at the time of publication.

01About usWe’re Wakeley and we’re unique. We specialise in creating great value, low-maintenance property investments designed to complement an existing portfolio or kick-start a new one. Whether you’re a novice investor or a seasoned professional, our Life Tenancy investments could help you realise substantial returns.

4Capital at risk. The value of the investment may go up and down, so may House Price Inflation. Statements of belief,projections, forecasts and expectations represent the Company’s own assessment and interpretation available to it at the date of this document. We recommend you carry out your own due diligence and not solely rely on the information provided.

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Lifetime Owners are entitled to the peaceful enjoyment of the property, and as an investor it is your responsibility to ensure that they can achieve that. There are other responsibilities, such as ensuring the buildings insurance is maintained and liaising promptly with the Lifetime Owner when necessary, but these responsibilities can be completely taken care of by our property management service. All Life Tenancy investments include a property management package as standard at a small annual fee. This ensures that all of the investor responsibilities are managed and helps to maximise potential investment returns.

management of all communications with the Lifetime Owner // conducting inspections of the property // annual reporting on investment performance // management of resale opportunities

buy a better or more suitable property // move to a better area // move out of rented or temporary accommodation // release money from the sale of a previous property // safeguard a percentage of the property’s future value // pay off mortgages, loans and other debts //

Examples include:This unique home purchase option gives people aged over sixty the chance to buy a property that may otherwise be outside their budget and live peacefully and securely in this property for the rest of their lives.

Lifetime Owners are able to safeguard up to 50% of the property’s future value when they set up the Life Tenancy. If they’ve chosen this option, the investor’s purchase price is reduced to reflect the value and percentage of the property being purchased. As an investor, you would still be registered as the property’s owner at Land Registry.

How and why are Life Tenancy investments created?02

Your responsibilities03

66 7Capital at risk. The value of the investment may go up and down, so may House Price Inflation. Statements of belief,projections, forecasts and expectations represent the Company’s own assessment and interpretation available to it at the date of this document. We recommend you carry out your own due diligence and not solely rely on the information provided.

Property management includes:

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Life Tenant InvestorProvider

Complete detailed property research

Set purchasing parameters

Property purchase

agreed

Investment purchase

agreed

Simultaneousexchange

Lifetime Lease purchase agreed

Life Tenancyinvestment opportunity

presented

Conveyancing

Conveyancing

Conveyancing

Solicitorinstructed

Solicitorinstructed

Solicitorinstructed


Simultaneous completion

Life Tenancy investment property purchased


Lifetime Lease purchased


Property purchased

Lifetime Lease sold

Life Tenancy investment sold


Purchasing process overview

Lifetime Owner qualified to enter into a Life Tenancy // discount and purchasing budget agreed // the Lifetime Owner commences property search and identifies property

Property Agreed Conveyancing Exchange / Completion

Lifetime Owner qualification

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Stage 03 Stage 04

Stage 01

Stage 02

Capital at risk. The value of the investment may go up and down, so may House Price Inflation. Statements of belief,projections, forecasts and expectations represent the Company’s own assessment and interpretation available to it at the date of this document. We recommend you carry out your own due diligence and not solely rely on the information provided.

At the end of the Life Tenancy, you will benefit from exposure to House Price Inflation on the full value of the property purchased, despite having purchased this property at a discount. As a guide, here’s how house prices have changed over the past twenty years:

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.

As the Lifetime Owners increase in age, the investment increases in value. Simply put, the older the Lifetime Owners are, the higher the likelihood that the property will return to you, the investor, hence the higher investment value. Similarly, any improvements made to the property by the Lifetime Owner, such as decoration or renovation, may also contribute to a rise in investment value. Without allowing for the impact of House Price Inflation or Deflation, there’s an opportunity for significant capital growth on the initial investment and the potential to resell the investment at any time.

70 yrs old single male15 yrs assumed tenancy period£110,000 investment purchase price£200,000 vacant possession value

increase in houseprices in the past

average annual increase*216 % 10.3 %20yrs

In this example, it would take 15 years of house price deflation at 4 % per year for the investor to make a gross loss** on their investment.

House Price Inflation and Life Tenancy

Protected returns

Capital growth

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* Source: Land Registry data 2016, properties in England and Wales** Gross loss does not take into consideration sales, legal or any other fees or costs.

It also assumes the Life Tenancy has ended.


The examples below are based on a £250,000 RICS vacant possession valuation and an assumed 4% annual House Price Inflation. They show how your initial investment and your returns vary depending on the length of the Life Tenancy, percentage of the property owned and the age of the Lifetime Owners.

Investment illustration08

12Capital at risk. The value of the investment may go up and down, so may House Price Inflation. Statements of belief,projections, forecasts and expectations represent the Company’s own assessment and interpretation available to it at the date of this document. We recommend you carry out your own due diligence and not solely rely on the information provided.

Example one - Male 62 & Female 65

House Price Inflation

£54,163£120,061£200,236£297,781

Total Capital Growth

£202,107£268,005£348,180£445,725

5 years10 years15 years20 years

ROI

198%263%341%437%

IRR

24%14%10%9%

Returns Profile

Investment price: £102,056 Ownership: 100% or £250,000

Example two - Male 75 & Female 75

Example three - Male 69


£54,163£120,061£200,236£297,781


£27,082£60,031£100,118£148,890


£159,311£225,209£305,384£402,929


£85,832£118,781£158,868£207,640



ROI

110%155%211%278%

ROI

130%179%240%313%

IRR

16%10%8%7%

IRR

18%11%9%7%

Returns Profile

Returns ProfileDiscount: £147,944 or 59%

Investment price: £144,852 Ownership: 100% or £250,000

Discount: £105,148 or 42%

Investment price: £66,250Ownership: 50% or £125,000

Discount: £58,750 or 47%

Life Tenancy investments can be traded between investors before the asset reverts. At this point, the investment valuation would be based on the following factors:

the age and number of Lifetime Owners // the property’s vacant possession value // any improvement work undertaken by the Lifetime Owner // any safeguarded percentage held by the Lifetime Owner

sell the property on the open market // rent the property out // move into the property yourself // give it to a loved one as an early inheritance

Do something newDiversify your portfolio with a low-risk, low-maintenance property investment with potential for growth from multiple factors.

The Life Tenancy ends when the Lifetime Owners no longer live permanently at the property. This can be triggered by one of three events: the Lifetime Owners moving into permanent care, passing away or otherwise choosing to end the Life Tenancy. At this point, the property is yours to do with as you wish.

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End of Life Tenancy

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Valuations, surveys & ownership

Day to dayReturns

Legal costs

How is the property value calculated?The property will be independently valued by a RICS registered surveyor prior to being offered for sale.

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Can I sell my interest in the property at any time? Yes, you’re free to sell your investment at any time. You’ll need to ensure that you adhere to the terms set out in the contract, as will the purchaser of your investment.

01 Can I visit or inspect the property? You’re entitled to visit the property once every three years at a time and date that is convenient to the Lifetime Owners, or sooner if there is an emergency situation. This is all taken care of as part of the Property Management package, as it’s important that the Lifetime Owners are left to live peacefully and securely in their home.

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Can I commission my own survey before I purchase? No, but we can provide you with a copy of the recent RICS valuation at your request.

02Purchasing & income

Can I raise a mortgage to purchase a Life Tenancy investment? Simply put, no you can’t. Life Tenancy investments can only be purchased using cash.

01Will I receive a rental income? No, the Lifetime Owners do not pay any rent; however, they are responsible for all maintenance and upkeep costs until the Life Tenancy ends.

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What happens to the percentage safeguarded by the Lifetime Owners when the Life Tenancy ends? If the Lifetime Owners have safeguarded a percentage of the property’s agreed value, this will be passed to them or to their estate. You will have two options: either sell the property and pay the amount due from the net proceeds; or, pay the amount due and thereby retain the property.

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What if the Lifetime Owners want to sell their safeguarded percentage?The Lifetime Owners have the right to sell some or all of their safeguarded percentage at any time, should they choose to. You’ll be given first refusal to purchase their share, but you’re not obligated to do so. The share will be sold at the discounted rate described in the Life Tenancy contract.

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Can I move into the property or rent it out? Yes, but only once the Lifetime Lease has ended. It’s your property to use as you see fit from this point on. In cases where the Lifetime Owners have safeguarded a percentage of the property’s future value, you would need to purchase the remaining share from the Lifetime Owners or their estate first.

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Can I make any changes to the property, or ask the Lifetime Owners to make any changes? No, you can’t. For the duration of the Life Tenancy, the property is the Lifetime Owner’s home and it’s their decision as to whether or not they wish to make any changes to the property. They will have to seek your approval for any and all structural changes to the property.

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Can anyone other than the Lifetime Owners live in the property? Peoples’ needs change as they get older, so the Life Tenancy does allow other people to live in the property alongside the Lifetime Owners providing they sign a legal waiver confirming that they will vacate the property once the Life Tenancy ends. The Lifetime Owners are also required to indemnify you against any costs should they fail to do so. The Lifetime Owners cannot move out, rent or sublet the property.

03Are the properties registered with Land Registry and am I on the title deeds?Yes, the properties are registered with Land Registry and yes, you are listed as the owner of the property on the title deeds. The Life Tenancy arrangement includes a Lifetime Lease which is registered at Land Registry and falls away when the Tenancy ends.

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Who has advised the Lifetime Owners? Before entering into a Lifetime Lease, the Lifetime Owner is required to seek independent legal advice from their solicitor. This solicitor is required to sign a certificate declaring that the Lifetime Owner fully understands the implications of the Life Tenancy and they’re happy it’s the right option for them. You will receive a copy of this certificate in your contract.

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Do I need to be regulated in order to buy a Life Tenancy? No, you don’t need to be regulated in order to purchase a Life Tenancy investment property. A Life Tenancy Investment is not a regulated activity because it is a property transaction not a financial one. It’s not a loan, mortgage or home reversion plan and there are no repayments, rent or interest charged.

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Whose legal costs am I responsible for?You are only ever responsible for your own legal costs. We can provide a panel of solicitors who are familiar with the Life Tenancy investment process if you’d like.The Lifetime Owners will cover their own legal costs before and during the tenancy.

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Changes to the property

Can the Lifetime Owners move home?Yes, they can. Under the Life Tenancy, they are able to move at any time. They will be responsible for all sale, purchase and legal costs associated with the move so there will be no cost to you.

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What if I don’t feel the new property is suitable? You are required to act reasonably in your consideration of the property. If the property is unsuitable due to its condition, legal title or suitability for a Life Tenancy, then you may refuse the purchase.

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Frequently Asked Questions11


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Register your interest to gain exclusive access to available Life Tenancy investments. You’ll benefit from regular updates full of our latest investment opportunities.

Register

Before you can purchase your first Life Tenancy investment, you’ll need to qualify as an investment partner. This is a standard process that confirms both your suitability to proceed with the purchase and your understanding of how the Life Tenancy opportunity works.

We manage the purchase of the Lifetime Owner’s chosen property through to completion and your Life Tenancy investment purchase will align closely with this process. We’ll be on hand throughout to answer any questions you may have and to ensure the purchase is progressing smoothly.

Qualify

Invest

This document is for the use of the addressee only. Recipients are required to keep the contents of the information contained in this document confidential. It may not be copied or distributed or otherwise made available by any recipient without the express consent of Homewise (“the Company”).

To the best of the knowledge and belief of the Company, which has taken all reasonable care to ensure that such is the case, the Company believes the information contained in this document is in accordance with the facts and does not omit anything, which is likely to affect the importance of such information. Statements of belief, projections, forecasts and expectations represent the Company’s own assessment and interpretation of the information available to it at the date of this document.

These assessments and interpretations are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors beyond the Company’s control and as such the Company does not represent that the statements, views, projections or forecasts are factually correct at the time of publication or at any other date.

The recipients must determine themselves what reliance they should place on the statements, views, projections and forecasts. We recommend you to carry out your own due diligence and not solely rely on the information provided.

Neither the Company, nor the proposed arrangement concerning the property which is the subject of this document, are regulated by the Financial Conduct Authority.

You should carefully consider whether you wish to purchase a property and you should carefully consider seeking independent financial advice from your financial adviser prior to making any investment.

Dated February 2017

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Next steps12

General provisions13


Welcome to Life Tenancy Investments

wak

eley

inve

st.c

o.u

k

A guide to LifeTenancy investment

Wakeley Residential Investments 01903 869638

f Wakeley Residential Investments t @WakeleyInvestl Wakeley Residential Investments

a guide to life wakeley residential investments...future value // pay off mortgages, loans and other...

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