Why wealthy Spanish seniors are selling their homes, but not moving out

Growing numbers of pensioners struggling to make ends meet are putting their properties on the market at lower prices, on the condition they may continue to live there until they die

A property listing for a luxury apartment.
A property listing for a luxury apartment.Luis Sevillano

A listing on a property website describes a stately apartment for sale in the heart of the upscale Madrid neighborhood of Argüelles. The property, which is worth €2 million, features floor-to-ceiling windows with panoramic views of the Spanish capital, jatoba wood floors, stucco walls and large, white-lacquered doors. Not to mention the 70-year-old woman in slippers cooking spaghetti in the kitchen.

Ana María is selling her stunning apartment under a bare ownership system. In other words, the client buys the property on condition that Ana María can live there until her death. In recent years, this type of deal has become popular in humble neighborhoods in Madrid as a way to tackle the precariousness faced by pensioners. But it is now increasingly popular with wealthy homeowners who want to maintain their upmarket lifestyle until their death.

In a house like this, every time, you receive a bill it gives you a big shock

Homeowner Ana María

Ana María says it would be a terrible shame to have to leave the home she has been living in for 20 years. As she makes lunch for one of her children, who is about to show up, she explains that she has spent the best years of her life in the stately apartment, where some of the neighborhood’s best parties once took place.

Packing up her things and seeing other people living in the rooms that she has so much attachment to would tear her apart, she says, as she walks through the living room, the dining room and the bedrooms with ensuite bathrooms. That’s why she has told her husband that this could be a good way to get rid of some debts hanging over them and spend the rest of their lives in comfort, without the fear of unexpected bills. “In a house like this, every time you receive a bill it gives you a big shock,” she explains.

The price of bare ownership is reduced according to the age of the seller, with the discount calculated based on how many years they are likely to continue to live. For example, for a seller who is 70 like Ana María, the sale price could be reduced by 40%, for one who is 80 there could be a 30% discount, and for a person 90 years or older, up to 20% off the cost of the property.

A bare ownership property listed by Engel & Volkers
A bare ownership property listed by Engel & VolkersEngel & Volkers

“Many people have wonderful children but others don’t. On the one hand, you resolve the problem of inheritance and if you want to, you can spend the money on whatever you want. It’s a phenomenal way to supplement your retirement,” says Ignacio Pérez-Portabella, a division director at the luxury real estate agency Engel & Volkers in Barcelona, which has sold many bare ownership properties.

“In our business, the number of bare ownership deals has risen by around 300% in just a year,” says the property expert Eduardo Molet, well-known in Madrid for his aggressive marketing campaigns. “The neighborhoods with the greatest demand are the most expensive ones, like Salamanca, Chamberí and Chamartín,” he adds.

According to Molet, Spain is a country of property owners, and a large part of family wealth is in property. While this tradition led to problems following the burst of Spain’s property bubble, it has become an advantage for the old and wealthy. This type of sales arrangement is a way to avoid becoming the cliché of the old marquis who drinks cheap wine in a palace that is falling apart because he does not have enough money in cash.

The advantages of bare ownership for sellers include not having to pay land value tax (IBI) or building homeowner association fees

In some situations, it is the children who push for this arrangement. Katherine and Elisa have inherited an apartment from their mother, Adelfa, an 88-year-old woman who enjoys watching the planes landing from the windows of her home in Arturo Soria. They do not want to live in there when their mother dies, and dividing it isn’t an option. That’s why they have decided to sell their mother’s place ahead of time for €860,000. Elisa, 59, plans to use the money on a business project with a friend, while her sister is a top executive and is not interested in living in the apartment. Elisa understands that they will be selling the property for less than it is worth, but argues that it means they will have money now. Although Adelfa may move to an aged care facility in the future, until then she can remain in her home, surrounded by family photos.

For sellers, the advantages of bare ownership include not having to pay land value tax (IBI) or building homeowner association fees, and their insurance premiums also go down. The buyer, on the other hand, is able to buy a home below market value and, according to law, has a right to receive it in a good condition.

María’s only heirs are on her husband’s side, and she holds them with little regard. Why would she leave them her beautiful home with views of a medieval castle? “The house is huge. I don’t want to live here alone if my husband dies. What I would do is sell the bare legal title, have money now in cash, and leave it when he is no longer of this world,” she says on the phone. Asked whether she intends to tell her nephews, Ana María replies, “No, why would I do that? This is mine and I can do whatever I want with it.”

Bare ownership expo

The 1st bare ownership property expo was held on October 25, 2018 at Palacio de Cibeles in Madrid and is now an annual event. The average price of the 500 properties up for sale is around €150,000 – between 40% and 90% below the market price. The cheapest apartment is on sale for €56,000 in San Blas in Madrid, and the most expensive one costs €525,000 and is also in the capital. Most sellers are between 75 and 80 years old and want to continue living in their homes, but cannot survive on their pensions.

English version by Melissa Kitson.

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