Unusual way for the over 60s to fund a home they want but can't afford
A four bedroom detached house for sale on Marton Close in Gargrave near Skipton is a good example.
It appears on Rightmove, listed by Dale Eddison estate agents, with a price of £749,950 but scroll down and you’ll find it advertised again by Homewise with a much lower price of £502,500.
There is also a brief explainer that this reduced price is for a “Home for Life with a lifetime lease for the over 60s”.
The dual listings are part of a move by West Sussex based Homewise to promote its offering to more areas of the country. Its core market has been in Hampshire, Essex and Kent.
At the moment, it has dual listing arrangements with Linley and Simpson, Dale Eddison and Hardisty estate agents in Yorkshire.
The only company of its kind in the UK, Homewise is a family business founded by Reg and Karen Neal in 1971 and it is now run by their grown up sons.
The couple realised that some over 60s have limited options when moving, not least because getting finance can be difficult, so they came up with a business model to help older generations secure their ideal homes for retirement.
The deal is that the customer will find a property they would like to live in and they will fund the majority of the purchase price with Homewise adding the rest.
If you are a younger “oldie”, you will fund more of the agreed house price, around 70 per cent, while Homewise will pay around 30 per cent and if you are in your 80s you might only pay 50 per cent of the purchase price with Homewise paying the other 50 per cent.
You are then given a Homewise Home for Life Plan with a lifetime lease on the property and you are responsible for the maintenance and repairs but can live there rent and mortgage free until you die or move into a nursing home.
Lifetime leaseholders do not own the property, Homewise does and when you pass away or move into a nursing home full time, the Home for Life Plan expires and property can be sold by Homewise, which retains all the proceeds.
At an extra cost there is an option to secure an inheritance by safeguarding up to 50 per cent of the property’s future resale value for your estate.
Unlike most residential property investments, the Homewise route is not financially advantageous for the lifetime leaseholder but it can improve quality of life, hence why the company is still busy after over 50 years in business and its Trust Pilot ratings are good.
Those buying a lifetime lease do so for a variety of reasons according to Kevin Wilkins, marketing director of Homewise.
Many people sell their existing home and opt for a lifetime lease to clear debts, including mortgages, or they want some equity from selling their property but don’t want to downsize or move to a less attractive area.
Others want to move closer to family in more expensive parts of the country and others are relocating back to the UK or dream of living by the sea but cannot afford the price of the property they want. Those separating or divorcing in later life are also Homewise customers.
After living in Spain for 12 years, Bill, 79, and Ruth, 74, sold their home to return to the UK but they struggled to find the right property in the UK within their budget.
They turned to Homewise so their property budget could be boosted with a Home for Life Plan and this enabled them to buy a two-bedroom bungalow.
Homewise paid £250,000 for the property and own it while Bill and Ruth paid Homewise £171,375 for their Home for Life lifetime lease.
While the second listing on homes for sale with estate agents is a way of promoting what Homewise offers, those who want to opt for its lifetime lease can choose any property on the market in England and Wales as long as the numbers stack up.
Homewise will negotiate the price and purchase the property and the Lifetime Lease is registered at the Land Registry and is portable so it can be moved to another property in the future.
If you pass away shortly after taking out a lifetime lease then the losses will be significant, but the company says that many Home for Life Plan customers live in their chosen property for 20 plus years.
There is ultimately only one winner financially in this arrangement and Homewise agree that it may not be the right option for everyone but they add: “For those we do help it can be life-changing; to live debt-free and secure in a property/location they love and perhaps could not have previously afforded.”