How to best use my flat to retire

jolynne_56

Hi this is my first post here, would much appreciate any advice on how I can best use my flat to retire and provide for my future.

I am 65 years old, single with no children, owns a 1 bedroom flat in a very good Central London Zone 1 location. I finished the mortgage ages ago, but the catch is the flat only has 60 years lease remaining which would otherwise worth at least £700K with a healthy lease.

I hope to retire fully in a couple years time. With no significant saving and only state pension to rely on, I wonder if there is any way I can best utilise my flat to provide me with a more comfortable retirement? My dream is to be able to get some money out of it to travel as I have never been outside Europe before.

Selling it would be tricky with the short lease remaining, and I assume the same with equity release as well? Should I try to extend the lease first?

Thanks.

TVAS

Extending the lease is the bleeding obvious. It doesn't matter if you do something or nothing the lease has to be extended. There are changes afoot on cost google for further information.

Sell
Gives you lots of cash but nowhere to live. However you could buy a small house and then travel I would suggest renting for three months abroad in the winter in Europe. Holidays further have the most expensive travel insurance.

Equity Release
On a value of 700k you might get half. No need to repay, on death the lender takes the house to repay your debt if anything is left it goes to your estate. There are lots of equity release on offer please ensure you read the documents rather than believe the rubbish spouted by the adviser. 

Rent 
Your property short term whilst you are away this will give you income and the rent you pay in Spain lets say is super cheap. Rental income is taxable. You would have to complete an annual tax return.

I would be minded to sell and buy a 2 bed house out of London if you can bear to leave. Somewhere with a good train link to an airport like Gatwick and also close to London for days out. The trick is finding somewhere nice. Or you can go North Hitchin is a nice market town and only 24 minutes to Kings Cross. Spend the money and enjoy your life, make gifts, you could invest some of it that is for a later post. You might end up in a remote part of the world and build a school or a vaccination clinic who knows Good luck.

Albermarle

Probably you could get a  nice one bedroom flat in a reasonably desirable area, a few miles outside the M25 , with a train link to London for £200K . Two bedrooms £300K ; small two bedroom house with garden £400K 

MEM62

Are you currently living in the flat?  

jolynne_56

MEM62 said:

Are you currently living in the flat?  

Yes I am, have lived there for nearly 40 years.

jolynne_56

I am reluctant to sell my flat as have lived there for most of life and used to my neighbourhood. My concern is the cost of extending the lease, how much would it roughly cost and do I have to get a loan/ remortgage to pay for the lease extension? Because it sounds like unless I renew my lease, there's not much I can do with my flat or it will sell for a really low price.

Marcon

jolynne_56 said:

MEM62 said:

Are you currently living in the flat?  

Yes I am, have lived there for nearly 40 years.

Why have you not tried to extend the lease before? Is it just a case of 'didn't think of it', or is there some sort of issue with doing so? Have you explored how much it would cost to extend the lease now, bearing in mind the lease length is below the magic 80 years?

It would still be saleable with a 60 year lease (almost certainly to a cash buyer), so it would be worth finding out the respective costs of extending the lease and selling with a long lease v selling as things stand now.

jolynne_56

I just didn't think too much of the lease until now, to be honest.

TVAS

OMG get on with it.

I did say google because changes are a foot regarding the cost of leasehold extension. https://myleasehold.co.uk/lease-extension-calculator/ it will give the cost for extending the lease. It is almost irrelevant how much it will cost because the value of the property will be so much higher and if as you suggest seem to lean towards equity release because you do not want to sell your house.

So you could get a secured loan on the flat to be redeemed when you get equity release. I would check google again with equity release lenders how much they are willing to lend on a flat and how long the lease needs to be.  

I suggested moving to a small house for no more hassle of a leasehold flat. However there are advantages of living in London.  

TAKE BACK CONTROL GET ON WITH IT.

xylophone

Do you have no occupational pension at all? You have never been a member of a pension scheme?

Have you obtained a state pension forecast?

Marcon

jolynne_56 said:

I just didn't think too much of the lease until now, to be honest.

Probably now would be a good time to think - and then actually do, even if 'doing' is simply deciding you don't want to do anything more about it. You are single with no children, and unless you're planning to live beyond 125, the current lease will see you out.