Pensioners Will Be Able to Generate Income from Their Property: Draft Bill

The Armenian government plans to introduce a reverse mortgage institution, which will allow pensioners to generate income from their properties. Under this initiative, pensioners will have the opportunity to mortgage their real estate to a bank and receive monthly payments in return. They will retain their ownership rights and the right to reside in the property.

During the government session on April 2, Suren Tovmasyan, head of the Cadastre Committee, noted that this institution was implemented decades ago in the United States and allows elderly individuals to derive income from their real estate.

“People living in real estate are unable to generate certain income while retaining the right to use and own their property. Developed countries have implemented and attempted to regulate this issue. If adopted, this legislative package will give property owners the option, upon retirement, to negotiate with the bank under clearly defined legislative regulations to transfer their real estate through a reverse mortgage, while retaining ownership and the right to reside there and receive income,” Tovmasyan presented.

According to him, with this mechanism, after transferring the property to the bank, pensioners will receive a certain amount of money every month, which will supplement their pensions and serve as an additional resource. At the same time, pensioners will not be obligated to make any repayments to the bank.

Later, heirs will be able to sign a contract with the bank and acquire the property by repaying the relevant amount. If such a demand does not exist, the bank may register its rights to the property and sell it at auction. If the money obtained from the sale exceeds the amount paid by the bank, the difference will be provided to the heirs.