Regulated Tenancies soon to be extinct
You may have seen in a recent edition of the Estates Gazette that regulated tenancies are becoming increasingly uncommon but still highly sought after by investors.
Regulated tenancies date back to the Rent Act 1977. This act applies to all residential tenancies created before 15th January 1989. Any new lettings after this date are governed by the Housing Act 1988 and are usually Assured or Assured Shorthold Tenancies (ASTs).
Unlike modern ASTs, regulated tenancies gave their tenants security. They have the right to live in the property, paying a ‘fair rent’ set by a rent officer, for their lifetimes.
Regulated tenancies are an attractive prospect to property investors as with a lifetime tenant paying a set, small rent, the properties can be purchased below their market value. The investment is best suited for those looking for long term capital growth rather than short term yields.
However, there are currently fewer than 75,000 regulated tenancies left, and all have an ageing tenant pool. So rather than buying at below market value, investors are purchasing at more than 90% of the vacant value. Even 100% sometimes.
This is where Life Tenancies come in and have been filling the void left by less and less regulated tenancies. We find that many of our newer investors have in the past bought regulated tenancies and thanks to our similarities, they find it an easy transition;
Life Tenancies have a person aged 60 or older living in the property who have the right to stay there, rent free, for their lifetime.
Life Tenancies can be bought, on average, at 47% below the RICS vacant possession valuation.
Life Tenancies are mid to long term investment with an average reversion time of 15 years.
Unlike regulated tenancies, the tenants in Life Tenancies cover all maintenance costs in the first instance.
Unlike regulated tenancies where they can pass down from person to person, there are no rights of succession with Life Tenancies. So, once the tenant either passes away or moves into care, the property reverts to you, the investor. The property is then yours to do with as you like; rent it out, sell it, move into it or gift it to a loved one.
We create Life Tenancy investments regularly. Demand may be high but there is no limit and so less competition to purchase an investment. As the sole creators of this investment in the UK, register with us and we can keep you updated with available opportunities as they arise.