A Paris flat at 80% off, if the seller dies soon: the macabre maths of property

A Paris apartment can change hands at up to 80% below its market value, and the buyer's return depends on how long the seller lives. That is the bargain at the heart of the viager, a French property contract in which the owner sells the home in exchange for a lifetime income paid by the buyer, plus an optional upfront sum known as the bouquet.

In the most common form, the viager occupé, the seller keeps the right to live in the property until death, so the buyer can only take full possession afterwards. A second version, the viager libre, leaves the home available from signing. The discount reflects the wait for occupancy and the open-ended promise of payments, with the price set from the property's market value, the seller's age and life expectancy, the initial sum and any right of occupation. Payments can be monthly, quarterly or annual and continue for as long as the former owner lives.

That uncertainty cuts both ways. A buyer who pays for years beyond the seller's calculated life expectancy can end up spending more than the home is worth, while a seller who dies soon after signing collects fewer instalments than a longer life would have brought. For the seller, the model turns property into retirement income while often keeping a roof overhead. French law recognises the arrangement, and the contract must be signed before a notary.

Hong Kong shows the reverse side of the same coin. Flats where a homicide or suicide has occurred can trade at discounts of up to 50%, and rents on such units run about 20% below the market average, according to estate agents cited by the South China Morning Post. Research by Zheng Chang and Jing Li, published in 2018 in Regional Science and Urban Economics, examined Hong Kong transactions between 2001 and 2015 and put the average markdown on units directly tied to unnatural deaths at 25%. The stigma spread: flats on the same floor fell 4.5%, other floors in the building 2.6% and other blocks in the same estate about 1%.

The researchers attributed most of the effect to stigma rather than any perceived rise in crime risk. Prices kept falling for roughly four to five years after such an incident before recovering gradually, suggesting the discount is not permanent. In both cities, the lesson for investors is the same: in property, a life - and its length - can be priced.