In the upmarket setting of Sunlaws village, near Kelso, Jim Hewitt is offering pensioners a tenancy till death in a luxury home overlooking Roxburghe golf course for a one-off payment of £200,000. Featuring homes with five bedrooms, drawing and dining rooms, study and detached double garages, this Charles Church-designed development sits in the grounds of a highly regarded country house hotel in 40 acres of parkland on the Duke of Roxburghe’s estate. To buy a four-bed house on the same development in the conventional way would cost £450,000.
Hewitt already has four options on properties at Sunlaws, secured for a £500 deposit. The first of these is available to rent now, and a second home will be offered to retired people on completion this summer. “If I get a favourable response, I’ll certainly be looking to offer a few more homes for rent under these conditions here, and I may consider expanding,” he says.
Hewitt’s homes can also be made available to younger renters in the run-up to retirement for a higher premium, based on their age. Couples will retain the lease in both names as protection against their partner’s demise, and they can sub-let the house if their circumstances change.
The landlord will arrange suitable buildings insurance and, as with generic rental agreements, tenants will be liable for council tax, utility bills and the day-to-day upkeep of the property.
Hewitt’s agent Simon Sanderson, of Edwin Thompson, says a life lease is an ideal proposition for parents looking to get their affairs in order. “They can sell off their principal residence, pass on their equity or reinvest their profits before making a final one-off payment that guarantees them a house for life.”
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Local precedents for Hewitt’s scheme do not readily spring to mind. On Royal Deeside, Inchmarlo, a residential care complex set within a restored Georgian house and a spectacular garden offers care packages tailored to the changing circumstances of its elderly residents.
“These are lovely houses, but even with the golf course there isn’t much of a market for corporate rents around Kelso,” says Hewitt. “Sunlaws is, however, a great place to retire to.”
Cynics will have spotted that the developer stands to turn a massive profit should his tenants expire quickly upon shelling out their £200,000, but Hewitt says: “Knowing my luck I’ll get tenants who live for another 30 years — it could equally backfire on me.”
With his properties accruing capital growth, however long his tenants live, Hewitt — who will see the houses’ titles revert to him at the tenants’ demise — is unlikely to be out of pocket.
But Sandy Burnett, of Murray Beith Murray, believes the Sunlaws scheme should come with both health and wealth warnings. The Edinburgh solicitor suggests that before considering such a scheme you book yourself in for a medical. “If you don’t smoke, don’t drink and are as fit as a flea it might be worth considering. Otherwise it’s an almighty gamble,” he says.
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“The years between 65 and 75 are too uncertain to be laying down so much on a property you won’t see any return from. I’d want to know — could my £200,000 be equally well invested in a smaller property, a couple of buy-to-lets, or in a rental that didn’t require a hefty downpayment?” Ronnie Ludwig, an accountant, believes Hewitt’s proposal is a lifestyle product rather than an investment vehicle. “Whatever the developer claims, I’d imagine he’ll have consulted an actuary’s life expectancy tables because as a tenant there’s every chance you won’t live long enough to make this package cheaper than renting conventionally,” he says.
“In most cases you’re paying £200,000 for five to 10 years of usage. After that point, the house will be too large for pensioners in ailing health.”
But Hewitt remains upbeat. “In Scotland, people may be just too reserved for life leases, but it’s a style of rental that’s well established in America and in some lower-end developments in England. These are nice houses that offer a good proposition for people who want a bit of luxury in their later years alongside freeing up their assets. There are no hidden charges and a legally binding contract.”
Edwin Thompson, 01896 751 300, www.edwin-thompson.co.uk