It is a niche market which could become a market of the future. Life annuity currently seems to be attracting the attention of both investors and sellers. A leading player in this niche, Renée Costes Viager estimates that the annual number of transactions carried out on this market, all players combined, has doubled since 2018 (from around 5,000 to around 10,000 today).
“Since the scandal denounced in 2022 on the operation of nursing homes [établissements d’hébergement pour personnes âgées dépendantes] Orpea and Korian, there is a clear resurgence of interest in this type of project, particularly among sellers aged 75 to 80, who are the core market target”notes Vincent Gibelin, founder of the Univers Viager network.
Difficulties in accessing real estate credit, linked in particular to the rise in loan rates, have made life annuity more attractive also for buyers, since this type of transaction makes it possible to buy housing without having to pay the full price on day of acquisition.
In the classic scheme, the buyer pays the seller, on the day of the sale, a sum called “bouquet”, supplemented each month by a life annuity (the amount depends, among other things, on the life expectancy of the seller). The more the seller wants a high rent, the weaker the bouquet and vice versa. Neither the bouquet nor the life annuity are however compulsory. In the case of an “occupied life annuity”, the buyer cannot live or rent the property immediately, this is only possible in the case of a “free life annuity”.
Supplement your retirement pension
“For example, for a property worth 300,000 euros occupied by a 74-year-old woman, the investor can pay a bouquet of 40,000 euros associated with an annuity of 600 euros per month”, illustrates Vincent Gibelin. The property will therefore be paid in total around 150,000 euros if the seller lives around fifteen years, which is her life expectancy, he specifies. It will be more if she lives longer, less conversely.
Be careful, if the seller dies within twenty days of signing the deed of sale, the law considers that the event was foreseeable and that the transaction is not valid. The cancellation of the life annuity can then be requested by the heirs of the occupant of the accommodation before the court.
This type of transaction is settled by mutual agreement. The buyer and the seller agree on the formula. Renée Costes Viager estimates that, in this market, 40% of transactions are carried out in Île-de-France, 90% are carried out in occupied life annuity and 56% relate to houses.
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