WHO HAS not dreamed of owning a pied-à-terre in Paris, or perhaps overlooking the Mediterranean? How about betting on the timing of a perfect stranger’s death? In France you can combine the two. In sales of property en viager a buyer pays upfront for a residence while getting the keys only when the current owner dies. Covid-19 has revived interest in the morbid scheme.
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The concept of viagers is nearly as old as property; rules laying out its modalities go back over a thousand years. Typically the seller gets cash for around a third of the value of the home at the time of the sale. Monthly payments from the buyer should add up to something nearer the full value of the property—assuming the seller dies at the time suggested by actuarial tables.
For sellers not afraid of tempting fate, viagers offer the chance to cash in on their homes yet stay in them, with an income to boot. That appealed all the more as covid-19 began to spread, and death rates in retirement homes soared. Specialist brokers reported a surge in enquiries as elderly people sought to remain in their homes for longer.
Even then, the estimated 5,000 viager deals signed in France every year represent less than 1% of all property sales. But the scheme’s long-expected demise never seems to come. Authorities promote it as a tax-efficient way for pensioners to cash in on rising property prices. Viagers also allow buyers to invest in property without a mortgage—the lender is, in effect, the seller-cum-tenant for life. The discount on properties sold for occupation at an unspecified time in the future is also an attraction.
Buyers of viager properties have to guess how long the kindly old grandfather on the other side of the deal has left. Ads for such sales come with descriptions of the place in question—and details of the age of the seller. Canny widows looking to cash out are known to light cigarettes ahead of visits by potential buyers to hint at their unhealthy lifestyles. All parties are aware of the industry’s freak event. In 1965 a 47-year-old notary bought a home en viager from a frail 90-year-old lady. He died 30 years later, but his widow kept making annuity payments, as the seller, Jeanne Calment, lived on to the world-beating age of 122.
Fans of viagers point out that betting on death is hardly unusual in finance: just look at the life-insurance industry. But the sinister undertones of such arrangements are hard to shake off. Some buyers have been suspected of hurrying nature along. In at least two murders currently in front of courts, authorities allege buyers did away with their tenants to gain possession of viager properties.
This article appeared in the Finance & economics section of the print edition under the headline “Terminal value”