The life annuity

Le viager

What is a life annuity?

A life annuity is a special type of property transaction involving the purchase of a property in the form of a lump sum called "bouquet" (initial contribution) and an annuity to be paid to the former owner (also known as the "crédirentier") until their death.

Life annuities can be occupied (95% of cases), vacant or semi-occupied.

The majority of life annuities available on the market are sold as occupied. In the last two cases, the purchaser (or "debirentier") can live in the property personally and receive benefits such as housing allowance if they are eligible. Alternatively, the buyer can place a tenant in the property, in which case the investment will be self-financing or almost so.

Life annuities, another approach to investment:

Life annuities are another way of thinking about investment. It\'s an ethical investment with a human touch, because it will give a helping hand to an elderly person facing a low pension and eroding purchasing power year after year. It is therefore a response to longer life expectancy, the financing of long-term care and the problems of financing pensions.

It\'s also an investment that\'s available to everyone. It allows access to property without being very wealthy, and is therefore not elitist. It also allows "atypical" profiles such as temporary workers or others to access property, whereas the banking systems prevent them from doing so (as in the case of vacant life annuities or vacant forward sales).

Furthermore, unlike a stock market portfolio and the risks it entails, a life annuity is anchored in a tangible reality, the "Stone".

Life annuities, in other words, are a different way of buying without the need for a bank:

A life annuity is an investment that allows you to bypass bank credit circuits by self-financing. It also means that you can build up your own assets for less money than you would have to spend on a conventional property purchase, and avoid the costs associated with bank loans in particular. In addition, buyers can acquire larger properties than they would otherwise be able to with traditional solutions, and which they might not otherwise have been able to buy due to lack of funds or a large budget.

Life annuity, a multi-faceted product:

Life annuities are a highly flexible investment that can take on many forms and be adapted to the needs of both seller and buyer. As mentioned above, a life annuity can be occupied, vacant or semi occupied, but it can also take the form of bare ownership or a forward sale. In addition, the payment and occupancy periods can be adjusted.

It\'s a timeless concept... yet it\'s changing rapidly:

Life annuities are as old as the Earth itself. There are traces of it going back to the Egyptians, Greeks, Romans and even the Middle Ages. It was Napoleon who formalised and codified this practice.

Although for a long time it remained a micro or niche market, new forms of life annuity are now tending to emerge alongside the real estate life annuity and the financial life annuity, in particular the so-called mutual life annuity. Purchasers take shares in a company set up for this purpose. The mutual life annuity limits the uncertain aspect of the real estate life annuity. It should be noted that this kind of life annuity takes the form of a "financial instrument". We still have relatively limited insight into this kind of product.

The question can legitimately be asked as to whether life annuities will not have the same pitfalls as subprime mortgages, especially when finance gets involved. Ultimately, wouldn\'t it be reductive to think of life annuities as just a financial product? Isn\'t there a whole other reality behind life annuities? A more human one? Moreover, isn\'t the main feature of life annuities, namely their random nature, being overlooked? That said, we can\'t help but agree with the idea, since it gets people talking about life annuities.

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