To prevent large landlords from having to sell and move to find financial comfort, start-up Dillan allows them to monetize their homes through their remaining owners. What is the principle?
INSEE forecasts confirm this: The French demographic will see their hair turn white. By 2070, the number of people over the age of 75 is expected to increase by 5.7 million, bringing the total proportion of people over the age of 65 to nearly 29% of the population. Consequently, nearly a third of the French will retire within 50 years.
Unfortunately, the vast majority of people experience a 15-40% drop in income at retirement. According to the CSA Institute, the average income of a retiree who lives alone is about 1,560 euros per month. However, the costs associated with old age are estimated at more than 1,000 euros per month for those over 75: we understand the financial difficulties faced by a certain number of seniors. Added to this are inflation, a fall in the level of pensions, a rise in consumer prices, and the reform of the new pension system…
Getting older shouldn’t be the stage in life where you give up on your personal plans. But how is it funded when the pensions granted by the retirement systems do not make it possible to maintain the quality of life? What are the options for seniors to get cash or finance themselves after 70?
The limits of traditional financing solutions and government aid
Bank financing surcharge
In theory, there is no age limit for getting a loan or applying for any bank credit. However, in reality, banking or credit institutions in general tend to close their doors to customers over the age of 70. The main reason is the risk of the borrower dying before repayment.
Depending on the envisaged loan, the banks will at least require repayment over a shorter period or a higher contribution. But the additional costs or additional fees come mainly from the insurance which has to be taken when applying for the loan; The amount of the latter is calculated in accordance with the capital lent, the term of the credit, as well as according to the age and state of health of the borrower. Thus, in fact, insurance is more expensive for the elderly / while the annual rate for a young worker generally ranges between 0.15 and 0.30%, it can be as high as 1.50% for those over 70 years old.
So seniors are not necessarily interested in using bank leverage as a source of financing for their personal projects, even if they can find a ready bank to pursue it.
Assistance policies that aren’t always enough to keep seniors at home
Today, seniors want to be able to age at home in the best conditions, avoiding solutions such as nursing homes or nursing homes.
Many financial aids, in the form of bonuses or benefits, were created by the public or local authorities to help the most humble. Thus, retirees can benefit from the old-age minimum (Solidarity Allowance for Seniors, ASPA) which allows a maximum income of €916.78 per person living alone (€1402.22 per couple). There are also allowances for seniors who have lost independence or who have a disability, to help them finance household assistance, human (cleaning, meals, toilets, administration, etc.) or technical (medical or modified equipment, conversion of accommodation or vehicle…). Pension funds have also created services such as assistance for “good old age at home”, which makes it possible to adapt the main place of residence of pensioners (within the framework of the public system). Finally, there is housing assistance for people who find it difficult to pay rent or make their monthly payments.
However, the amounts of the allowance are fixed and conditional (especially on income), which excludes a significant part of the elderly population.
Invest your home without leaving it, a fun initiative for big owners
As Stefan Revaux, co-founder of Dillan notes, “ One of the paradoxes that a large number of seniors face is the discrepancy between their liquidity needs and the value of their illiquid assets, for example their principal residences. They are considered “affordable” on paper, yet they are prone to financial difficulties in their short or long-term projects. Obviously we think of the example of Ile de Re farmers, but many of the elderly living in urban centers, whose land value has exploded in Recent years, they are also worried.
To prevent seniors from having to sell and move to find financial comfort, the three founders of Dylan had the innovative idea of letting large landlords convert their homes into cash by the remaining owners. The principle is simple, retirees give Dylan a share of their property according to the amount they need. The stake sold to Dylan can represent up to 30% of the property’s value.
Based on the principle of co-ownership, a contract between the company and the Elder allows the latter to remain owner of his property, maintain full enjoyment of the housing (Dylan being only “sleeping partner”) and release the normally withheld cash. The main advantage of this alternative financing solution, the senior remains the majority owner of his property and can always pass it on, unlike, for example, an annuity. Each seller (or his heirs), of course, has the possibility to redeem his share at any time according to the development of his personal situation.
For people who want to mobilize more capital, Dylan also offers other complementary offerings this time including a full transfer of property – seniors keep using their property – allowing to receive up to 85% of the free value. commodity.
Real Estate Retirement Plan: Allowing savers to participate indirectly in financing seniors
In order to complete the utopian circle of financing for seniors, Dylan, in parallel with offerings for seniors, created the Plan Retraite Immobilier (PRIMMO) for savers. The principle is simple: Investors prepare for their own retirement by improving the retirement of others by becoming contributors to an innovative and virtuous investment that is 100% invested in residential real estate for seniors.
Accessible from just €1,000, the subscription is entirely online, without an intermediary, keeping costs to a minimum for investors (allowing only 1% administrative fees and zero entry or exit fees). The advantage of investing exclusively in residential property and moreover oriented in a large market is twofold: this sector is known to be more stable than the office or service sector, and the risk of having a rental vacancy here is almost non-existent – the occupants are large landlords who want to stay in the house for the longest time possible. Thus, investors can expect an attractive target return of 5% via an ethical and responsible investment solution that contributes to intergenerational solidarity.