A new form of property investment in Spain

A form of investment and a new way to sell your home in Spain yet live there for the rest of your life.

Brian Tracy, legendry business commentator once said that you can have anything that you want in the world. All you need to do is help other people get what they want.

There might be a new form of getting what you want from Spanish property investment and very much helping others too.

An increasing number of Spanish pensioners are choosing an option called bare ownership, or “naked” ownership, I suppose equity sale we´d call it in the UK. The process does help out budding homeowners and investors with generally 50% discounts on their properties.

But the perfect offer is attached to one condition.

The catch is that the concept of bare ownership, allows the seller to continue living in the property after the purchase goes through and until they pass away.

In other words – an investor buys your house and by use of the usufruct law, you (the home owner) can live there forever. You never leave your home, but you get 50% of the value into your bank account immediately.

Having real estate assets for Spanish people has been for many years a way to guarantee the future availability of money. Many homeowners now however are unaware that there is a way to sell their house and continue living in it. You can get the money today and stay in your own home until the end of your days.

The formula deeply rooted in other countries such as France and Italy (and even Britain now) is the sale of naked property. We can do the paperwork between the buyer and seller at Spanish Solutions as you can imagine. Normally the seller is a pensioner, but they can of course be younger.

Of course, there is no maximum age.

In this way, the seller keeps the usufruct of the house for life. (Usufruct is the right to live in the house until you die – a legal clause that cannot be refused by the investor) . For the home owner who may be having a cash crisis it helps by increasing their income and improving their quality of life.

The investor/buyer acquires the bare property, as an investment, to dispose of or rent or live in it at the end of the usufruct.  We were always told that home ownership is the key to happy retirement. Is this still true for British and Irish property owners in Spain? A change of mentality is taking place even in Spain and too amongst British retirees that allows more and more elderly people and their families to use the fixed asset of their house to increase their income and their quality of life.

“It will give me peace to die in my house”. So said 82 yr old Victoria Green when speaking to a local newspaper. She is a typical elder lady happy to sell her apartment for a lower price than market value to achieve this.

“I brought my family up here many years and have memories and I do not want to be worried about managing until I die” This is the nub of the matter. Do not worry, and live in the house you have always lived in.

Another older gentleman said “My children are all doing brilliantly in the UK. They won’t need this house when I die, in fact it is more a problem for them, so by selling it now we will all find it easier. Particularly me.”

So, just to clarify the legal side of this Spanish law:

Usufruct in Spain is a right to live in a property and use the assets of another person as if they were their own. It is common in some other European countries. There is the obligation to conserve and maintain the asset as if it were theirs.

Once the person dies (we all die sometime!), the formalities are very easy, with the property being registered under bare ownership following usual procedures and with a death certificate.

We really want to emphasise the fact that in our opinion before establishing this arrangement, it is best to discuss what both the buyer and the seller really are looking to achieve to make sure this is right for them.

Who does the investment appeal to?

• Local investors, people who know Spain. (Every area is different you don’t want to end up with an asset in an area where you cannot resell)
• Foreign people with savings and economic solvency who are looking for a safe investment in Spain in the medium to long term.
• Those who do not want to get involved with risky investments.
• People who will retire to Spain in the medium to long term. (Think 15 years on average) The buyers of naked property in Spain will acquire a real estate property at a very advantageous price. The tenant will maintain it and keep it as if it was theirs, which it sort of still is.

Advantages for the seller.

This scheme is perfect for a seller or home owner who needs some cash now.
Perfect if you have no heirs or they are not dependant on your financially after your death.
An owner looking to enjoy their retirement years much prefer a 12 month round the world trip to owning a massive asset which they cannot turn into real money.  An owner looking to reduce their home costs will love it. Maybe use the money to pay off existing mortgages and loans yet still remain in your own house.

If you are interested in taking advantage of this law either as a property owner or as a Spanish property investor, please contact us and we will do her best to help you in your particular situation.

Ian Comaskey