Is this a mad idea ?

GlasgowExpat2

I’m 56 and live in a 3rd floor tenement flat worth approximately £250k.  Love my flat, though soundproofing not great
Considering selling my flat and renting. Calculated that the proceeds would allow me to rent a property for £800 p/month for 26 years. 

MovingForwards

What happens if rent shoots up in price?
Why don't you sell up and move somewhere else?

Personally I wouldn't go into rental for retirement as you're at the mercy of LLs and could be moving in your glory years instead of being settled. Would you be happy packing up and moving at 80 years old?

luvchocolate

Try housing associations for over 55s  secure tenancies and much cheaper than private 

p00hsticks

GlasgowExpat2 said:

Considering selling my flat and renting.

Why ?

You don't give a reason - is it to free up money to do something with ? to move to a different part of the country ? to travel ? or what ?

Without knowing why you are thinking this way it's impossible to give an opinion on whether it's crazy or not....

MalMonroe

p00hsticks said:

GlasgowExpat2 said:

Considering selling my flat and renting.

Why ?

You don't give a reason - is it to free up money to do something with ? to move to a different part of the country ? to travel ? or what ?

Without knowing why you are thinking this way it's impossible to give an opinion on whether it's crazy or not....

OP DID give a reason, which is - 'the proceeds would allow me to rent a property for £800 p/month for 26 years.' Thus living mortgage and rent-free for 26 years.

MalMonroe

GlasgowExpat2 said:

I’m 56 and live in a 3rd floor tenement flat worth approximately £250k.  Love my flat, though soundproofing not great
Considering selling my flat and renting. Calculated that the proceeds would allow me to rent a property for £800 p/month for 26 years. 

But what happens when you're 82 and the money runs out? Eviction? I'm older than you and I'm considering moving from a rented flat and buying my own. Having owned property before, I just prefer living in my own home. Nothing wrong with renting for those who like it but I just don't.

Ergo, in summary, I'd have to say yes, it IS a mad idea. Very very mad indeed.

Murphybear

luvchocolate said:

Try housing associations for over 55s  secure tenancies and much cheaper than private 

My husband and I live in an over 60s complex.  It is owned by an award winning Housing Association.  They are a charity and as such don’t rip the tenants off.  We have just had our next years rent/maintenance review and it is slightly less than this years.   You get an AST for the first year then automatically change to an AT which gives you tenure for life if you wish it.  When we moved in 3 years ago they didn’t ask for references or a deposit.  They also welcome housing benefit which many private landlords are reluctant to accept.

We have a massive communal lounge and have lots of social gatherings, sadly curbed because of covid19 but we are officially allowed to use the lounge for coffee mornings as long as we sit 6ft apart.

precovid we had some brilliant parties and we are planning a big “end of restrictions” party.

We are free to do what we want in the property, such as putting up shelves, redecorating etc.  If we wished we could put a brand new kitchen or bathroom.  We chose this deliberately as neither of us has any family and when the first one dies the other won’t be left on their own.  (Sorry if that sounds a bit morbid but we thought about it for a long time)

p00hsticks

MalMonroe said:

p00hsticks said:

GlasgowExpat2 said:

Considering selling my flat and renting.

Why ?

You don't give a reason - is it to free up money to do something with ? to move to a different part of the country ? to travel ? or what ?

Without knowing why you are thinking this way it's impossible to give an opinion on whether it's crazy or not....

OP DID give a reason, which is - 'the proceeds would allow me to rent a property for £800 p/month for 26 years.' Thus living mortgage and rent-free for 26 years.

That's not really a full reason though - is it to rent a larger property in the same location as they are now ? or in a different part of the country where perhaps they cant afford to buy ?  Or is the motivation to clear an existing mortgage (the OP doesn't say if they are mortage free or not ) ? Or to free up some extra cash ? To reduce expenditure to allow early retirement ? I still say we need more information as to why the OP is considering this as a course of action....

shinytop

GlasgowExpat2 said:

I’m 56 and live in a 3rd floor tenement flat worth approximately £250k.  Love my flat, though soundproofing not great
Considering selling my flat and renting. Calculated that the proceeds would allow me to rent a property for £800 p/month for 26 years. 

Assuming rent goes up with inflation, in 20 years time your £800 becomes £1200. You're going to have to invest your money in the stock market to keep up. A bad run on the markerts could make things difficult for you.  If this is your only source of income for your housing needs then yes, without knowing more of your circumstances, it sounds like a mad idea!

blue.peter

I can't say that it's something I'd do. You say that you love your flat, and yet you're thinking of selling it and moving. OK, but why rent rather than buy? That seems very odd to me. As others have pointed out, there are clear disadvantages.

I'm a little older than you and also own my house outright. Whilst I'm thinking of moving, I wouldn't consider renting rather than buying. For me, the disadvantages outweigh any benefits.

Let's look at the maths. £800 x 12 x 26 = £249,600. OK, I can agree that much. But there's a big assumption in there: that rent increases won't exceed the interest that you can earn on capital. In practice, I very much doubt that that will actually happen. I would expect rent increases to exceed interest - and probably by quite a bit. That'll cut down your 26 years for a start. Of course, you could invest your capital on the stock market instead of putting it in interest-bearing savings, and thus get earnings that outstrip rent increases. But that carries a massive risk: that the reverse could happen, and your capital actually loses value.

In 26 years, you'll be 82. I don't know what your health's like, but there appears to be a pretty good chance that you'll live longer than that. My father lived to 86, and my mother's still going at 88. What will you do for housing when your money runs out?

TELLIT01

If the OP has no dependants I can see the attraction of freeing up money whilst still at an age to enjoy it.  The simple calculation of the money running out in x years doesn't take into account earnings up to retirement date, and pension income after that.  I'm guessing that some form of equity release won't be available for a flat, but might be worth investigating.