How to continue living in your house after selling it

Did you know it is possible to sell your property and still live in it? It is! Thanks to the bare ownership you can continue enjoying your home once it is sold. It is a practice increasingly widespread in Spain that consists of living in your house without owning it. Do you want to know more about this trend? Keep reading and find out everything about it!

Let's start by explaining what bare ownership is in a simple way. When a person decides to buy a house, he/she is buying a freehold property. This is divided into bare ownership and life usufruct as we can see in the image below.

San Sebastián, Spain - bareownership.jpg

The practice that is expanding in our market, therefore, is to sell a part of the freehold property - just the bare ownership. Bare ownership is the right that a person has to continue living in their house without being the owner of it. Acquiring the bare ownership does not mean that the possession of the house is for the buyer since the usufruct still belongs to the original owner (normally until the latter's death). 

Let's see it with an example: Manuela is a 72-year-old widow with no children who lives in a flat in the city centre of San Sebastian. She wants to increase her income to improve her quality of life and to be able to enjoy more with her friends. To make this happen, she decides to sell her bare ownership of the property, since she wants to continue living in her house until she dies. There is a buyer, Pedro, interested in this house, as he believes that he could rent it in the future. The income for Manuela will be between 50% and 80% of the property's market value. As for Pedro, he will pay a price below market value.

Therefore, if the sale takes place, this is the situation in which they would be: Manuela would be a tenant living in a house owned by Pedro. She will live there until she dies and when that happens, Pedro will have the freehold property and he will be able to rent it as he wished.

San Sebastián, Spain - bareownershipex.jpg

It is no coincidence that Manuela is a 72-year-old woman. The profile of people who sell their house in this way is mainly of people over 65, who want to increase their income, etc. This method also means that the expenses derived from housing are lower for the seller (Manuela, in our case), having to pay only those corresponding to ordinary consumption (water, electricity...), since it will be the buyer (Pedro), who will have to take over the property tax, insurance and extraordinary apportionments. 

As we have seen, this practice can be an interesting way for both seniors and investors since the acquisition of a property in bare ownership is made for a price below the market value.

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