Property retirement: flexible living and utilising assets
Property retirement creates a win-win situation for owners and buyers. Senior citizens can stay in their property and improve their financial situation at the same time. Buyers benefit from flexible amortisation without traditional bank loans. But what exactly is behind property annuitisation and what models are available?
What is property retirement?
In times of demographic change and falling pensions, property annuities are becoming an attractive solution. The buyer does not pay for the property in one lump sum, but in regular instalments - similar to a monthly supplementary pension. The seller also has the option of continuing to live in the property, either for a limited period or for life.
The exact annuity process is contractually agreed and based on actuarial calculations. The advantage: Compared to a traditional property sale, annuitisation creates flexibility, avoids inheritance disputes and secures the owners' financial future.
The property retirement models
There are two common models available for property annuities:
1. life annuity
The life annuity guarantees the seller a monthly payment for life. The amount is calculated on the basis of the property value and statistical life expectancy. This model is particularly suitable for senior citizens who are looking for long-term financial security.
- Lifelong monthly pension payment
- Right of residence remains in place
- No time limit
2. time pension
In contrast to the life annuity, the term annuity is limited in time. The buyer pays the purchase price in instalments over a fixed period of time. The seller retains the right of residence for the agreed period or can move out earlier, depending on the agreement.
- Monthly instalments for a fixed period
- Regardless of the age and gender of the seller
- Flexible organisation of residential rights
Advantages of property annuitisation for sellers
Property annuitisation offers numerous advantages that create both financial and personal security:
- Right of residence is retained: The seller can remain living in the property for life or for a limited period.
- Financial flexibility: The monthly payments supplement the pension and improve the financial situation.
- Less effort for maintenance: The new owner is responsible for maintaining the property.
- No one-off payment necessary: The purchase price is paid in instalments.
- Flexibility when moving out: If the seller moves out earlier, the monthly pension increases due to the cancellation of the right of residence.
How the pension is calculated
The monthly pension payment is based on the value of the property. A property expert determines the market price, which is then adjusted for the right of residence and the expected life expectancy. The final contract is notarised and the payment obligation and the seller's right of residence are recorded in the land register.
In addition, the seller is provided with security: the buyer is liable for the punctual payment of the monthly instalments. In the event of non-compliance, a reassignment of the property can even be agreed.
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Robert Schüßler
Property valuer (EIA and IHK)
