The life annuity is a particular real estate transaction that consists in acquiring real estate in the form of a sum lump (also called “bouquet”) and monthly annuities to be paid to its former owner (also called “annuitant”) until his death.
The vast majority of the life annuity real estate market consists of occupied properties. In the last two cases, the purchaser (or “débirentier”) may live in the property himself and receive benefits such as housing allowance if he is eligible for this kind of assistance. He may also place a tenant in the premises and in this case, the investment will be self-financing or almost.
The life annuity is another way of thinking about investing a certain amount of money. It is like an ethical investment because it is going to be a good thing for an elderly person who is facing a low retirement allowance with a purchasing power that is eroding year after year. It is therefore a response to the lengthening of life, the financing of dependency and a response to the problems of financing pensions.
It is also an investment for every kind of “budgets”. It allows access to the property without being very wealthy and, therefore, is not elitist. It also allows “atypical” profiles such as temporary workers (or other kind of similar profiles) to gain access to the property, while banking systems do not allow them to do so (in the case of a vacant life annuity or a vacant term sale).
Moreover, contrary to a stock market portfolio and the risks it entails… the life annuity system is anchored on a tangible reality… the “Stone”.
The life annuity is an investment that bypasses bank credit circuits because it is self-financing. It allows, moreover, to build up a real estate patrimony with a lower starting amount compared to a traditional purchase and to avoid the costs induced by a bank loan. In addition, the purchaser can approach different types of properties than in traditional schemes (in which the buyer would probably not have been afford that kind of estate because of a lack of funding or the need to have a bigger budget than in a life annuity system).
The life annuity is very flexible system that can take several appearances and be adapted to the needs of everyone, seller as well as buyer. As noted above, the life annuity may be occupied, vacant, semi vacant but may take the form of bare ownership or term sale. Moreover, payments and occupation periods can be flexible.
The life annuity system “is old as the World”. There are traces of it under the Egyptians, the Greeks, the Romans or even in the Middle Age. It is Napoleon who will formalize its usage and codify it. Long remained at the level of a micro-market or niche market, new forms of life annuity now tend to appear in addition to the life annuity in the real estate market.