Renting in retirement

Mrs_Z

Just a thought... would it be an option to buy now and then consider doing an equity release at a later date? 

marycanary

Deleted_User said:

RetSol said:

My concern about your plan is that you are treating your house as an asset, not a home.  Do you want to be a tenant with little security of tenure, possibly for a considerable number of years?

The “security of tenure” is a purely psychological issue.  In reality people with cash flow will always have a nice place to rent and call home.  People without cashflow will struggle regardless of owning an expensive house. 

I agree someone with money will always be able to find a new place to live but even the best and wealthiest tenant only has two months of security (after the initial term). Do you want to be in the position of being forced to find a new home, pack up and move with 2 months notice when you are old and your "health is not optimal"?  I don't think many people would welcome such a situation. If you are interested in renting, how about shared ownership? Buy 25% and rent the other 75% from a housing association. 

mat1964

Mrs_Z said:

Just a thought... would it be an option to buy now and then consider doing an equity release at a later date? 

yes that's an idea also.

Retireinten

Personally I can see the benefit of renting whilst you're still working but once you do retire I'd be looking to spend a portion of your £450k on a property to eliminate the rent cost and give you long term security that renting just doesn't give you.

Aim to spend no more than half that amount, and yes it might be a big property downsize - can you live with that? I'd also consider moving further away to get more for your money but aim for somewhere that's relatively easy to commute to, to see family once retired. 

This would be my approach but I have never rented and I just don't like the thought of not owning the roof over my head. I also put great value in feeling secure.  A (downsized) property + £450k in savings/pensions + a DB pension + state pension would = more security than no property + higher running costs + £650k in savings/pensions etc etc..... for me anyway!

pjcox2005

If you're only planning to be in London a year or so, then I wouldn't buy again i'd rent as legals, SDLT etc aren't going to be worth the hassle given it won't save much with all those costs added on.

Then you need to work out what you want to do in retirement if you have no ties. Is there a place in the country you'd prefer to live. If so what are the rents like compared with buying a small place/amount lost in terms of return on investment.

Would you like to move about a bit and experience different places or countries if so that may be another reason to rent for now.

shinytop

If your need to live within the M25 is a temporary one you should definitely not buy another house.  But if you want to downsize eventually and have a reasonable offer for your current house, why not take it now and rent?  Once you're in a more permanent situation you can reassess.   The other thing to bear in mind is that even with low interest rates, you'll make something even if you leave the house sale money in cash.  And if you're downsizing and renting, you'll have lower council tax and utility bills and zero for maintenance.  

MEM62

Personally, I would be extremely uncomfortable with the prospect of renting in retirement.  It is far from the secure and settled position that I would like to be in.  I am also not convinced that the numbers work long-term.  In the OP's position I would downsize, even to something like a 2-bed flat, which it fine for a single guy, and work the rest of my finances around that.            

[Deleted User]

marycanary said:

Deleted_User said:

RetSol said:

My concern about your plan is that you are treating your house as an asset, not a home.  Do you want to be a tenant with little security of tenure, possibly for a considerable number of years?

The “security of tenure” is a purely psychological issue.  In reality people with cash flow will always have a nice place to rent and call home.  People without cashflow will struggle regardless of owning an expensive house. 

I agree someone with money will always be able to find a new place to live but even the best and wealthiest tenant only has two months of security (after the initial term). Do you want to be in the position of being forced to find a new home, pack up and move with 2 months notice when you are old and your "health is not optimal"?  I don't think many people would welcome such a situation. If you are interested in renting, how about shared ownership? Buy 25% and rent the other 75% from a housing association. 

If you want “security” like this, you can sign a longer tenancy agreement than the standard 6 to 12 months. Thats assuming you need this “security” rather than flexibility. 

And, of course, the landlord is responsible for all the repairs which could be a pain for an older person otherwise. 

And later on different living arrangements will be required in any case. 

Buying a house is a lifestyle choice.  People have an instinct for doing it but often its a bad decision which exposes them to a lot of risk of having the majority of net worth in one type of asset in a single location. And its expensive to maintain property. Becomes impossible if you have no cash flow. Older people have trouble looking after a house, so it loses value even if nobody builds an ugly supermarket across the road. 

A good rule of thumb:  take your age and subtract it from 90. Thats the percentage of your net worth you can safely allocate to real estate. 

kangoora

The insecurity of a 1 year tenancy would worry the hell out of me in retirement, especially as I hit my 70's. Potentially you could get booted out of every house you rent every 12 months, obviously worst case scenario.

With no ties you can move anywhere in the country. Plenty of places where you can get decent 2 bed bungalows for <£200k - Lincolnshire, areas of Northeast & Yorkshire & Lancashire, Wales, areas of Scotland - not talking about hellholes either, just regular family housing estates. There's been at least 3 (unrelated) old couples moved from London, bought a 2 bed bungalow and settled in our road in the last 20 years (circa 240 miles away from London).

german_keeper

kangoora said:

The insecurity of a 1 year tenancy would worry the hell out of me in retirement, especially as I hit my 70's. Potentially you could get booted out of every house you rent every 12 months, obviously worst case scenario.

With no ties you can move anywhere in the country. Plenty of places where you can get decent 2 bed bungalows for <£200k - Lincolnshire, areas of Northeast & Yorkshire & Lancashire, Wales, areas of Scotland - not talking about hellholes either, just regular family housing estates. There's been at least 3 (unrelated) old couples moved from London, bought a 2 bed bungalow and settled in our road in the last 20 years (circa 240 miles away from London).

Our next door neighbour is from Harrow originally. We live on the Fylde coast and she absolutely loves it. For example one of our daily exercise walks is in the countryside, the other on the Lancashire coastal path, both in walking distance. 2 and 3 bed bungalows probably range from £140k to £200k depending on size. 

Over the years (pre Covid!!) her sister and husband, who still live in Harrow, have visited regularly and whenever they come up a group of us gather for a few drinks. Her BIL is a great bloke and freely admits he gets on much better with the people up here than he does back home. Their house is paid for and I think he said was worth over a million. He always says that it is so obvious that they should sell up and move up here and that he can find no obvious reason to stay put. But for some reason they just can't get to the point where they make the move.