It is not an uncommon practice to buy a property with a sitting tenant, but investing in a property with no return might seem nutty as fruitcake.
This three bed semi-detached house with a driveway and a garage is on the market for sale in leafy St Albans, Hertfordshire, which was recently voted the top commuter city for people working in London.
The asking price is £350,000 which is a whopping £250,000 less than the average price of similar properties in the area.
Unusual catch
The bargain house for sale comes with strings attached though, namely the owner aged 64 who wishes to carry on living there rent-free after it sells.
“The only benefit I can see for an investor is the fact that it would be classed as tax neutral, as there’s no income, so you wouldn’t pay any tax on no income, but why would you invest with no return? – commented Mark Rowe, Managing Director at Rowe Property Services.
“Could it be because there’s the element of buying this house at a largely reduced price, with the option of selling at a later date, perhaps?”
Despite this unusual selling condition, Peter Yielding, claims to having received two “firm offers” for his house.
Home reversion
The practice of selling part or whole of a house at a reduced price in return for allowing the buyer to keep living there rent-free until they die or move into a care home, is called ‘home reversion’.
The older the buyer is when they sell, the higher the percentage of the property’s market value they receive. Such an arrangement can be beneficial for both parties, unless the seller outlives the buyer as happened with the most infamous example of home reversion in France in 1965.
Andre-Francois Raffray bought a flat in Arles in a cut-price deal from Jean Calment, aged 90 at the time. He agreed to pay her £250 a month while she was still living in the property. Mr Raffray did not foresee, however, that his tenant would end up living for another 32 years. He paid more than double the flat’s value before he died aged 77 in 1995, two years earlier than Mrs Calment. She was the world’s oldest women, aged 122.
