Do you want to unlock money from your holiday home in Spain, yet keep your property for 5, 10 or more years? 

Equity release with bare ownership is a financial arrangement commonly used in property transactions, especially in countries like Spain, where it is often referred to as a "nuda propiedad" arrangement. It involves selling the bare ownership (or "nuda propiedad") of a property while retaining the usufruct, which is the right to use the property for life (or for a set period). This method is often used by older homeowners to access the equity tied up in their property while continuing to live in it. 

In other words, just imagine your home in Alicante is worth 150,000 euros today. An investor will come to the table and offer you a Cash amount right now. That can be anything from 80,000 to 120,000 euros. You reserve the legal right for you, your family or friends to come on holiday for a week, a month or even six months. The amount of money you receive will depend not just on location or the condition of your Spanish home like a “normal” Spanish property purchase but will also depend on how long and how often you use YOUR home.

Here's how it works:

Key Components:

1. Bare Ownership (Nuda Propiedad): 
   • The bare owner owns the legal title to the property but does not have the right to live in, use, or benefit from it as long as the usufruct holder (usually the original homeowner) is alive or retains the right of usufruct. This is the legal right of the investor.
2. Usufruct:
   • The person who retains the usufruct continues to have the right to live in and use the property or to rent it out and collect any rental income.
   • This right can be retained for life or for a specific number of years, depending on the agreement. This is the legal clause that protects our homeowners.

Process:

• Homeowner Sells Bare Ownership: The homeowner sells the bare ownership of the property to an investor or a buyer. Many Spanish buyers are searching actively for these deals. The buyer typically pays a lump sum to the homeowner. The price will be lower than the full market value because the buyer will not gain full use of the property until the usufruct ends (often upon the death of the homeowner or at the end of a pre-agreed period).
• Homeowner Retains Usufruct: The homeowner retains the right to live in the property or rent it out, without losing their right of use and enjoyment during their lifetime or the duration of the usufruct.
• No Monthly Payments: Unlike other equity release options (like lifetime mortgages), the homeowner does not have to make any repayments or pay interest.
• The Buyer’s Role: The buyer of the bare ownership essentially purchases a future interest in the property. They get full ownership, including the right to use it, once the usufruct expires.

Benefits:

• Homeowner Receives Lump Sum: The homeowner receives an immediate cash payment, which can help fund retirement or other expenses.
• Continued Living: The homeowner can continue living in the home or benefit from rental income, depending on the arrangement.

Risks and Considerations:

• Reduced Inheritance: For heirs, this arrangement means they will not inherit the full ownership of the property, as the bare ownership has been sold.
• On the positive side: In Spain, heirs can inherit up to 100,000 euros in cash or assets with virtually no inheritance tax. (Depending on what region of Spain we are talking about). We can structure this deal as a “gift” so you could, in theory, pull 100k from your house, donate it to your grandkids and they ultimately end up with the same money as if they had to go through the full inheritance process. The big difference is you have access to this cash NOW, rather than 10 or 20 years down the road. 
• Valuation: The amount of money received from selling the bare ownership is typically less than the property's full market value, as the buyer must wait to fully access the property.
• Longevity Risk: The buyer is taking a risk that you, the homeowner may live for a long time, which would delay their full ownership of the property. Living in Spain does increase the length of happy years you have in front of you! 

This type of equity release is commonly used in Spain, France, and some other European countries where property owners, especially retirees, want to access the capital tied up in their homes without having to leave.

We can now offer a unique package that suits Irish and British owners of Spanish homes. 

Why not get in touch?