Viaje: a way to achieve ownership that spans history - Agency Journal

The market for lifetime leases and bare ownership has been growing by 5-10% annually, on average over the last ten years, as people's mentality is slowly but surely changing regarding this form of sale.

Olinda Longuepe, a specialist in this field, tells us the history of this credit instrument. Now, the sale of a life tenancy is no longer seen as 'taking away an inheritance', but as a means of funding home stays, making it easier for families to meet their subsistence responsibilities.

95% of older people want to stay at home for as long as possible. Extracting cash from the property to stay in the home, rather than selling to fund a medical facility, is the essence of a lifetime lease. Why? In the case of a permanent stay in a nursing home or senior center, it makes more sense to sell your home directly and safely place the proceeds in a social security facility than to rely on private investors to pay rent that sometimes does not come in. A life annuity is a maintenance debt that must necessarily be fulfilled, which is why it is governed by the Civil Code.

The story below brings us back to the essence of a lifetime lease: enjoying a residence in exchange for rent. (Rents can already at that time be regarded as maintenance debt). For a long time now, the X-ray has been a real credit tool. Known to the Romans, tenancy for life was used in France from the first centuries of our history and developed in the Middle Ages with the establishment of a secured sum of money or land fund of a church or monastery with the condition of lifetime use in the form of use or rent. This practice is brought closer to rent by the edict of Charles the Bald (grandson of Charlemagne), which in 846 prescribes that the donor should receive, as the case may be and as a life annuity or use, double or treble the value of his use granted on ecclesiastical property. Later, by an edict of 1661, all benefits accruing to ecclesiastical communities from rents were withdrawn, limiting the use of this mechanism to relationships between private individuals. Later, the church forbids the growth of interest: it recommends interest-free loans between friends. The annuity then becomes a true credit instrument. Already at the end of the thirteenth century rents begin to develop.

An alternative to investing in real estate without an investment In the nineteenth and early twentieth centuries, life annuities had some success because, in the absence of an organized mortgage lending system, they were virtually the only way for individuals lacking the necessary capital to access property. In the 1980s, during a period of severe inflation, lifetime leases became widespread. In fact, many people wanted to invest in real estate. However, the level of prices and interest rates was such that it discouraged investors. Not only did they have to have a significant personal deposit, but they were also facing hard mortgage repayment deadlines. A lifetime lease presented an interesting alternative for them. Inflation became more moderate in the 1990s. Lower interest rates for mortgages have made lifetime leases less attractive.

A now? What is happening in 2023? Access to mortgage credit has now become more difficult, and for-sale freehold housing is again attracting investors who can own the home immediately, either to live in it themselves or to rent it out without bank involvement.