Calculation of usufruct and bare ownership

As actuaries, at Quibus we help the parties involved in the negotiation of the sale or purchase of a property by means of a lifetime annuity.

Total value of the property = Usufruct + Bare ownership

The sale or purchase of the bare ownership means receiving or paying a lifetime annuity for the value of the bare ownership; whether you are buying or selling, we will help you.

Protect your investment and minimise the risk

We will help you to analyse the risks associated with the sale and purchase and advise you on how to assess them.

The importance of a fair price in calculating bare ownership and usufruct

The economic agents, the buyer and seller, act reasonably, following the advice from professionals, in order to assess the random operation and the advisability of assuming the longevity risk or not.

Quibus can help you:

As an investor, to determine a fair price for the sale and purchase transaction by means of a lifetime annuity.
As the owner of the property, to determine the monthly pension to be received in the sale and purchase transaction.

These sale and purchase transactions are increasingly common and this is why it is necessary to get individual advice

Actuarial services for sale and purchase involving bare ownership and usufruct

Valuation, assessment and calculation of a fair price for the property, usufruct and bare ownership

Our actuaries are specialists in conducting valuations of fair prices for property. We conduct an objective evaluation of the value of the usufruct and the bare ownership and provide an estimate of a fair price.

Actuarial analysis of the risk involved in the sale and purchase transaction

We identify and quantify the risks, and provide advice for both the buyer and the seller on how to assess these risks. We perform a profitability analysis to determine whether the purchase or sale of the bare ownership is a good investment and the amount of the lifetime annuity involved in the operation.

Calculation of the lifetime annuity income for the bare ownership

The calculation of the lifetime annuity income for the bare ownership is based on several factors, such as the owner’s age, their life expectancy, the interest rate and the value of the property, among others.
Quibus provides you with a lifetime annuity calculator so that you can assess for yourself how much your lifetime annuity income would be based on the value of the bare ownership.

Evaluation of life expectancy

In the lease contract for the property, the seller retains the right of use and enjoyment of the property during their lifetime, namely the usufruct. Therefore, it is important to have a good estimate of their life expectancy in order to determine the total value of the property. As specialists, we can help you to determine life expectancy when we calculate the lifetime annuity income for the bare ownership.

Probability of survival beyond life expectancy

The probability of survival beyond life expectancy is based on different factors, such as medical advances, a healthy lifestyle, personal care and genetic factors. Life expectancy is a demographic average but it does not set an absolute limit for longevity. We take into account the probability of longevity as a key factor when determining a property sale involving a lifetime annuity.

Advice on planning retirement

We can advise you on planning your retirement and maximising your income during this period. We will analyse the different options and advise you on the most suitable combination of assets and liabilities so that you can meet your retirement goals.

Assessment of investments

We can advise you on investments in order to design a sound strategy and achieve your long-term financial goals and maximise the potential for growth.

Compliance with regulations

We are familiar with the regulations and standards that apply to transaction of the sale or purchase of bare ownership by means of a lifetime annuity. We can advise the parties on compliance requirements and assist in ensuring that the transaction complies with the applicable standards and regulations.

We can help and advise you with the calculation of a fair price for the bare ownership and usufruct. Contact us.

We will contact you within 24/48h.

We will call you to find out your needs and how we can help you.

We will evaluate your case over the next few days.

We will analyse the situation and offer strategic proposals to improve your investments.

We will conduct monitoring, including your investments.

We will keep you informed of changes in the financial market and the results of the actions performed.

Example of the sale of bare ownership for a lifetime annuity

Juan owns a property valued at 500,000 € and is interested in selling it in exchange for receiving a lifetime annuity income and remaining in his home. María, on the other hand, is interested in investing in the purchase of the bare ownership and agrees to Juan continuing to live in his home.

For this transaction, María and Juan have hired Quibus to determine the value of the lifetime annuity income that María should pay Juan for the bare ownership.

Our expert actuaries make the relevant calculations to determine the fair price for the bare ownership, taking into account: the price of the property, Juan’s age and life expectancy, among other values.

They also consider the current interest rate to mitigate inflation over the coming years. Using these data, they calculate the current value of the future payments of the lifetime annuity income that María has to pay Juan as long as he lives.

In the end, they determine that the appropriate amount for the lifetime annuity is 2,500 € a month. María and Juan agree with this value and proceed to sign the bare ownership sale and purchase contract.

In this example, the actuary plays a key role by determining the fair value of the lifetime annuity income that María has to pay Juan. The actuary’s experience and skill concerning the calculation of the lifetime annuity guarantee that both parties receive fair and equitable treatment in the bare ownership transaction.

Frequently asked questions about the calculation of bare ownership and usufruct

How is the value of the lifetime annuity for bare ownership calculated?

The calculation of the lifetime annuity for bare ownership is made by means of a complex mathematical process that considers several factors, such as the usufructuary’s age and life expectancy, the current interest rate and the market value of the property. Our actuaries are qualified to make this calculation and determine a fair amount for the lifetime annuity income that the buyer has to pay for the value of the bare ownership.

How can I know if the purchase or sale of a property by means of a lifetime annuity is a good investment?

In order to determine if the bare ownership is a good investment, it is necessary to: analyse the current value of the lifetime annuity compared to other options, consider your long-term financial goals, evaluate how it fits in with your existing portfolio and take your personal situation and financial needs into account. We can help you with professional financial advice to obtain an accurate evaluation. Bear in mind that each situation is unique, so it is important to a take an informed decision based on your individual circumstances and financial goals.

What are the main advantages of the sale or purchase of a property by means of a lifetime annuity?

The main advantages of the sale and purchase of a property by means of a lifetime annuity for the seller is receiving a lifetime annuity income in exchange for the bare ownership, that is to say, they retain the right of usufruct for the property; and for the buyer it can mean a substantial saving on the property price.
We recommend that both parties consult our expert actuaries about the operation in order to achieve a fair price.