A life annuity property sale consists of selling a property in exchange for two main elements:

• The lump sum: an amount paid to the seller at the time of the sale.
• The life annuity: a regular amount paid to the seller, usually every month, until their death.

The seller is known as the annuity creditor, because they receive the annuity. The buyer is known as the annuity debtor, because they must pay this annuity.

Unlike a traditional sale, the total price actually paid by the buyer is not always known in advance. It mainly depends on the seller’s lifespan. This is exactly what makes a life annuity property sale interesting, but also riskier.

Let’s imagine an apartment estimated at CHF 900,000.

The seller accepts a life annuity property sale with:

• a lump sum of CHF 225,000, equal to 25% of the property value;
• a monthly annuity of CHF 2,500;
• a lifelong right of residence.

If the seller lives another 15 years, the buyer will have paid:

• CHF 225,000 as a lump sum;
• CHF 2,500 × 12 months × 15 years = CHF 450,000 as annuity payments;
• for a total of CHF 675,000.

However, if the seller lives another 25 years, the buyer will have paid:

• CHF 225,000 as a lump sum;
• CHF 2,500 × 12 months × 25 years = CHF 750,000 as annuity payments;
• for a total of CHF 975,000.

This example clearly shows the principle of a life annuity sale: the seller secures an income, while the buyer accepts a degree of uncertainty linked to the seller’s lifespan.

There are mainly two forms of life annuity property sale: the occupied life annuity and the free life annuity.

With an occupied life annuity, the economic price is often lower because the buyer must wait before being able to use the property. With a free life annuity, the property is immediately available, which generally makes it more expensive.

The calculation of a life annuity depends on several factors:

• the market value of the property;
• the seller’s age;
• statistical life expectancy;
• the type of life annuity: free or occupied;
• the amount of the lump sum;
• the amount of the annuity;
• the existence of a right of residence or usufruct;
• charges, maintenance and taxation.

In practice, the lump sum often represents around 20% to 30% of the property value. However, this is not a mandatory legal rule. The amount depends on the negotiation between the seller and the buyer.

The higher the lump sum, the lower the monthly annuity generally is. Conversely, the annuity can be higher if the lump sum is lower.

A property is estimated at CHF 1,000,000.

The seller chooses a lump sum of 25%, which means:

CHF 1,000,000 × 25% = CHF 250,000

There is therefore CHF 750,000 left to be converted into an annuity.

If the estimated payment period is 15 years, this corresponds to:

CHF 750,000 ÷ 15 years = CHF 50,000 per year

That is approximately:

CHF 4,166 per month

In reality, the calculation is more complex. The value of the right of residence, the discount rate, the risk, taxation and the guarantees included in the contract must also be taken into account. This example is only intended to explain the general logic.

Switzerland is a country with a high cost of living, especially during retirement. At the same time, a significant part of many owners’ wealth is often tied up in their property.

According to the Federal Statistical Office, around 35.7% of occupied homes in Switzerland were lived in by their owners in 2024. In the canton of Fribourg, this share is around 42.3%.

This means that a significant part of households owns a property. However, this does not automatically mean that they have enough liquid assets to live comfortably.

A life annuity can therefore allow some owners to convert part of the value of their property into additional income.