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Life tenancy – a discounted approach to UK residential property investment


It may seem far-fetched, but today it is possible for investors to buy UK residential properties at discounts of up to 60%. This can be achieved by purchasing a home through life tenancy. But what is a life tenant and how do you go about finding these opportunities?

What is a life tenant?

Life tenants are individuals or couples over the age of 60 who want to secure a home for the rest of their life. Most will sell their existing home to release the equity and use part of this equity to fund a life tenancy agreement under a new property of their choice. They have secured the right to live in the property for the rest of their lives. The tenancy agreement expires only when the surviving tenant dies or goes into long term care.

While the life tenants are not the legal owners, their names are registered at the land registry, protecting their rights to live in the property. The life tenants don’t pay traditional rent on a monthly or annual basis, instead paying an up-front one-time payment.

Many life tenants see this as an opportunity to downsize, move to a better area, move closer to family and friends or to change to a location that better fits their long-term living needs, like moving from a city to somewhere in the country. For retired individuals, life tenancy agreements represent their best opportunity to free up much of the value of their existing home and access that cash for their retirement needs.

Buy UK residential property at a major discount

Life tenancy agreements offer the opportunity for these properties to be purchased at a discount of up to 60% of the vacant valuation, with the average property being sold at 45% less. The reason for this discount is because the property includes one or more life tenants to live in the property rent free until they die or go into long term care. The length of the life tenancy is unpredictable of course – it is a life tenancy after all.

Some investors in these opportunities never intend to actually use the property themselves. Their real interest is in the potential gain that can be realised from purchasing a UK home at such a discount (up to 60%). There is no rent to be collected, of course, and the commitment could be a long term one, stretching into decades. Nor could these properties be purchased with mortgages – they are really only for cash buyers.

“It is critically important that potential life tenants are properly screened, and this can be a long and involved process,” says Paul Beale, co-founder of MacBeale Properties. “Not everybody is suited to becoming a life tenant, and the life tenants make their choice after consulting with their immediate family and friends to ensure the proposed property meets their long-term needs and the financials make sense. However, our unique proposition means that we have the Property and the Life Tenant(s) pre-packaged and our investors can decide which property is best for them.”

Finding the right life tenancy opportunities

MacBeale works with investors to help them find the right life tenancy opportunities around the UK. Investors are presented with a weekly list of opportunities. Frequently decisions to buy are made in a matter of hours due to the demand.

“We need to have investors who are cash buyers and ready to act quickly, as the number of opportunities remains small and once they are gone, they are gone,” says Beale.

Beale says the investment often appeals to British expatriates because they want to build capital for their retirement or purchase property for their children. They understand the UK property market and have substantial cash reserves earning minimal rates of interest, and they are looking for a safe investment for their savings.

Life tenancy investments are also bought by foreign nationals who have no intention of living in the UK – these investors don’t want the burden of a typical buy to let property. They don’t need to be dealing with letting agents, short term tenants, maintenance issues and the other risks associated in the buy to let market.

Clients of MacBeale receive a weekly list of opportunities and must be prepared to act quickly if a property deal comes up with a life tenant who is ready to partner with an investor.

  • Find out how you can invest in a Life Tenancy with MacBeale

Key factors to bear in mind

• Life tenancy agreements allow retirees to move into a property of their choice at a substantial discount to the purchase price, although they will not own the property.
• Investors have the title to the property from the outset but cannot interfere with the tenant who has the right to live there until they die or go into care.
• The investment represents the opportunity to buy a house at a major discount to current UK market prices, with the potential of capital appreciation on the property over the tenancy period.
• Life tenants are screened in advance and must seek independent legal advice before entering into a life tenancy agreement.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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