Home Reversion - Your questions answered
How do we calculate how much you
receive?
We consult actuarial tables that provide mortality rates determined
by your age and gender. These are similar to those used for
calculating life insurance premiums, annuities and pensions.
We use these tables coupled with information about your property
and circumstances to arrive at a reversion rate.
The rate is then applied to the market value
of the property. In general terms, the older you are, the
higher the rate you will receive. Don’t forget that
you have the legal right to live in the property rent free
(except for any nominal amount or existing ground rent in
the case of leasehold properties) for the rest of your life
or until you enter long term residential care, provided you
observe the terms of the lease in full.
May I move and if so what are the
restrictions?
Yes you may move. Depending on which Neville James plan you
choose, different terms apply. Generally speaking, the prior
approval of the Home Reversion Provider will be required,
and there may be an administrative charge involved, which
is detailed in the lease or a separate Tariff of Charges.
You will also be responsible for the cost of valuation for
the new property, any additional funds required to complete
the purchase, any Stamp Duty Land Tax, legal and any other
costs associated with the move (including any legal fees incurred
by the Home Reversion Provider).
Who is responsible for maintaining
and insuring the property?
As it is still your home, you are responsible for repairs
and maintenance just as you are now. You are required to ensure
the property is adequately covered by buildings insurance.
Contents insurance will also remain your responsibility if
you wish to take out such cover.
How do you determine the property’s
value?
An independent surveyor will put a market value on the property.
In some cases we may be able to use an independent surveyor
of your choice, otherwise we would appoint an independent
surveyor from our panel who would then carry out the work.
You will receive a copy of the valuation along with your formal
offer.
What are the costs?
There are no hidden costs with a Neville James Home Reversion
Plan.
We do not charge an administration or a
valuation fee, although you are requested to pay £95
towards the
valuation (for properties valued at £500,000 or less),
this is refundable on completion. The only costs you must
allow for are the costs of any financial advice you receive,
plus your solicitors costs for the transfer of ownership to
the Home Reversion Provider and the granting of a lifetime
lease. You need to allow around £500 for legal fees
for an average case.
What are the tax considerations
involved in Home Reversion Plans?
Currently the capital sum you receive is free of Capital Gains
Tax. However, if you are taking out a plan to supplement your
income or as part of a tax mitigation programme you should
consult your Financial Advisor. Please also bear in mind that
any age allowance/state benefits you receive may be affected
as a result of taking out a Home Reversion Plan.
What happens if the investing party
goes into liquidation?
Our Home Reversion Providers are very substantial investors.
However, if this should occur, you are fully protected by
your lease or co-ownership agreement so absolutely nothing
can happen to you. Your lease is also registered at the Land
Registry as part of the transaction so your right to occupy
is protected.
I have heard that I should look
for a Home Reversion Provider who is a member of SHIP. Who
are SHIP and what benefits do member firms offer?
Safe Home Income Plans (SHIP), is a company supported by the
leading providers of home income and equity release plans.
It was launched in 1991 and is dedicated entirely to the protection
of plan holders and promotion of safe home income and equity
release plans. All participating companies are pledged to
observe the SHIP Code of Practice.
- To provide a fair, simple and complete presentation of
plans;
- To ensure that the customer’s legal work is performed
by the solicitor of his/her choice, who will be required
to sign a certificate to confirm the scheme has been explained
in full;
- To state clearly the main cost to the householder’s
assets and estate;
- To carry a “no negative equity guarantee”
(you will never owe more than the value of your home).
Neville James can select a Home Reversion
Provider who is a member of SHIP, however you should bear
in mind that all our plans comply with the above Code of Practice,
even if the Home Reversion Provider is not a member.
Will I need to use a solicitor?
Yes. It is important that you are reassured by your own Legal
Advisor that you and your partner have lifetime security of
tenure. Your solicitor will also be able to confirm that you
are legally entitled to move should you wish to do so, and
the terms that will apply.
Will my benefits be affected?
It is possible that releasing cash in your home may affect
your state benefits. Please make sure you seek appropriate
advice from your Financial Advisor.
Do I need to consult with my family?
It is always advisable to discuss financial decisions like
this with your family. We will ask you to confirm you have
done so at the application stage.
Will I be disturbed in my home at
all?
No, however the Home Reversion Provider will ask you to confirm
your occupancy and that it is adequately insured. They may
also ask you to let them check on the condition of your home
periodically. This visit is by prior arrangement and should
only last a few minutes.
I still have a small mortgage; can
I release equity to pay this off?
Yes, indeed you may even decide to use the equity released
to pay off other loans not related to your property. Please
note that the Home Reversion Provider will insist on the property
being mortgage free after completion of the transaction.
I want to release capital to improve
my home, how do I benefit from the increase the improvements
would make to the value?
This is a popular reason for releasing equity, and some of
our Home Reversion Provider partners are happy to take future
alterations into account at quotation stage. In this case
we will get two valuations of your home, one prior to the
improvements and one based on your plans. Some of the equity
will be retained and once the Home Reversion Provider or their
solicitors are satisfied that the work has been carried out
the remaining cash can be released. This way the money you
receive is based on the valuation after the improvements have
been made.
Under what circumstances can the
Home Reversion Provider ask me to leave my property?
As long as you observe the terms of the lease, your right
to occupy your home is guaranteed until you die (or for joint
ownership properties, when the surviving partner dies) or
become resident in long term care.
What happens if I want someone else
to share my home after I have taken out the plan?
Your home remains very much your own, and if you want someone
else to live with you on a permanent basis this should not
be a problem. All that is required is that you advise the
Home Reversion Provider of this, obtain their consent to the
new occupant and arrange for them to sign a disclaimer saying
they will leave the property on your death (or that of your
surviving partner). Our Home Reversion Providers may ask you
to sign an indemnity against loss of profit arising from any
delay in the sale of the property after the lease ends and
any expenses incurred in removing the other party.
"And in the end it's not the years
in your life that count. It's the life in your years"
Abraham Lincoln
This is a Home Reversion Plan. To understand
the features and risks, ask for a personalised illustration.
A Home Reversion Plan is a complex property
transaction. You should seek legal advice to ensure that you
fully understand all of the implications for you and your
home and for anyone who might otherwise inherit the property.
- Taking out a Home Reversion Plan may affect your tax and
welfare benefits position. Tax and welfare benefits can
change and you should consider seeking further information
from HM Revenue and Customs, Benefits Agency or another
source of advice such as your Financial Advisor, Solicitor
or Tax Advisor or Citizens’ Advice Bureau;
- Under a Home Reversion Plan, you will cease to own that
part of the property sold to the Home Reversion Provider.
You will therefore neither benefit from any increase in
the value of that part nor be able to leave it to your beneficiaries
on your death;
- Your right to occupy the premises will be subject to the
terms of the lease which forms part of this Home Reversion
Plan;
- You will not be able to secure future borrowing from any
source on any portion of the property;
- Neville James Limited does not provide advice on the suitability
of Home Reversion Plans for individuals;
- Levels and bases of, and reliefs from, taxation are subject
to change. Clients are recommended to seek their own independent
advice based on their personal circumstances.
You should seek advice from your Financial
Advisor.
Neville James Equity Release is a division
of Neville James Limited, which is authorised to arrange the
sale of Home Reversion Plans. Neville James Limited is authorised
and regulated by the FSA.
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