Investing in Bare Ownership: Split Ownership Appeals to Conservative Investors
Buying a home without having the right to use it for 15 to 20 years, with a significant discount at the outset and no rental management responsibilities: bare ownership is returning to the forefront of wealth management, driven by regular new offerings from specialized providers.
An investor who enters into a bare ownership agreement is making a simple bet. He forgoes rental income and the use of the property for a predetermined period in exchange for a purchase price that has been significantly discounted. The mechanism is based on the separation of the two rights that constitute full ownership.
The bare owner retains ownership of the property without having the right to use it, generally for a period of between fifteen and twenty years, while a usufructuary-landlord manages the rental of the property and collects the rental income on an ongoing basis. At the end of the term, the bare owner automatically regains full ownership, without any additional costs or taxes associated with the restoration of their rights. It is this automatic increase in value, without taxation upon exit, that makes the arrangement so attractive.
The model appeals to savers looking to build up a deferred source of income without the hassle of managing it. Perl, a subsidiary of Nexity and a mission-driven company since January 2021, recently demonstrated this with two residential developments launched in Saint-Cyr-sur-Loire, a residential town of 17,000 residents on the outskirts of Tours. Active in this niche for twenty-five years, the developer has built more than 12,000 apartments throughout France, from major cities to mid-sized towns, including coastal and mountain regions. The choice of a city in the Loire region served by a tram system, trains, and an airport—in the heart of the Loire Valley, a UNESCO World Heritage Site—is aimed at meeting rental demand driven by students and working professionals.
A Discount at Purchase, Transferred Obligations
In both Touraine residences, the apartments—ranging from studios to three-room units—are offered at a 38% discount off the full ownership price, starting at 69,000 euros, for an average price per square meter of approximately 2,800 euros. The term of the split ownership arrangement is seventeen years, managed by a local social housing provider. Throughout this period, the provider is responsible for property maintenance and the property manager’s compensation.
The investor assumes no rental risk, no vacancy risk, no responsibility for routine maintenance, and no obligation to find tenants. For a taxpayer who finances the transaction with a loan, the interest on the loan remains deductible—subject to certain conditions—from existing property income. The signing of the notarized deeds will take place throughout 2026, with deliveries expected in 2028 and 2029—a timeline that requires tying up funds well before the property is theoretically available for use.
A long-term horizon and a location that needs to be verified
The trade-off for these advantages is that the capital is tied up. The capital remains tied up for the entire duration of the separation of ownership and usufruct, unless the bare ownership is resold on a secondary market that remains limited, which may force a further discount on a seller in a hurry. The transaction is therefore suited to investors with a long-term investment horizon—often those anticipating a decline in income upon retirement and seeking an asset that requires no management and involves no ongoing tax obligations. Location plays a major role in the final equation. The quality of the rental market, demand from students or working professionals, access to public transportation, and the financial stability of the usufructuary all determine the property’s value at the end of the separation period.
Before committing to a rental arrangement for nearly two decades, a saver would be well advised to evaluate the location, the developer, and the landlord with the same level of scrutiny as when purchasing a property outright. The discount only makes sense if the property maintains—or even increases—its value over time.
Property division is also of interest to taxpayers subject to high tax rates. For the entire duration of the arrangement, the property held in bare ownership is not included in the tax base for real estate wealth tax, as the usufruct is held by the grantor. This tax relief, combined with the initial discount and the absence of taxable property income, explains the recurring interest of wealth management advisors in this arrangement, which is reserved for savings that can be tied up without difficulty.
