Life tenancies are created when an elderly homeowner sells his/her property to you while retaining the right to live rent free in it for the rest of his/her life. They do this to free up some cash that they need for their retirement expenditure, such as for living expenses, or to pay a down-payment on their child’s property, or to go on a holiday.
This provides you with a unique home purchase opportunity, by reducing the price of the property purchase significantly.
The actual price that you pay is calculated based the current open market value of the property, less a reduction based on the life expectancy of the occupants. The reduction is higher if the occupants are younger, and lower if the occupants are older.
It is important to note that, for simplicity and objectivity, More To Life’s actuarial engine uses general mortality tables in Malaysia, which uses the age and sex of the applicant (together with the age of sex of spouse in the case of a joint life) only, in order to calculate the expected duration of the tenancy. It does not make any adjustments for the health of the applicant or any other factors.
You will also have to bear the transaction costs, including your legal fees, stamp duty, and fees to More To Life.
Entering into a Life Tenancy
This involves executing a sale and purchase agreement, and a lifetime tenancy with an elderly homeowner. You can read more about the process in our step-by-step guide.
Rights and Obligations during the Life Tenancy
The lifetime tenant will be responsible for maintenance and the bills, including quit rent, assessment, insurance, services and charges etc.
They are contractually obligated to continue to maintain the property in a liveable standard at their own expense, and we will verify this with inspections should you engage us to conduct them.
However, you are contractually responsible for the structure of the property, and will have to restore it to its original condition in the event of any damage, such as a fire.
The End of the Life Tenancy
On the occurrence of demise or permanent vacation of the property to go into care, vacant possession of the property will revert to you. You may choose to sell it for its appreciated value and realize your return.