£400k for 12 months. What are the options?

HeWhoDares

So here's our predicament.

We are moving abroad (in the EU) - hopefully for good.  However, we want to hedge our bets and while we are prepared to sell our house, we want don't want to buy in the country until we know we are absolutely sure it was the correct decsion.  We will re-evaluate after 12 months.  

As we will be renting in a capital city, this is very expensive and we could definitely do with some help towards the cost.  We are fortunate in that we don't need this upfront, so we can wait 12 months if need be (i.e. we can muddle through provided we get something back in 12 months).

So we will have approx £400k from the house sale, but need a return.  We are fairly risk averse.  

There are so many options - and not averse to hearing yours!! - but the main ones appear to be:

1. Keep the house and rent it out - but this will mean it is difficult to liquidise the assets when we need to - and of course CGT.
2. Buy 2 flats in UK and rent them out - better return than option 1, but this will mean it is difficult to liquidise the assets when we need to - and of course CGT.
3. 12 month Bond - but probably at a lower rate than inflation.

Anything else??  E.g. can we open some Swiss bank account type of thing that we don't know about??

Thanks for all your help in advance.

[Deleted User]

You can check cgt here: https://www.gov.uk/tax-sell-home/let-out-part-of-home

It won't be much if you have lived in the home.

I moved to Germany and rented my apartment out for 18 months before selling it. Paid a management company 12% of the rent to deal with everything. Find and handle tenants, repairs etc.

bostonerimus

Why do you need a return? If this money is perhaps to buy a house in 12 months time then I would put it in a few easy access saving accounts or National Savings. 

Alistair31

Option 1 and 2 are totally stupid for the period you are talking about. 

Albermarle

HeWhoDares said:

So here's our predicament.

We are moving abroad (in the EU) - hopefully for good.  However, we want to hedge our bets and while we are prepared to sell our house, we want don't want to buy in the country until we know we are absolutely sure it was the correct decsion.  We will re-evaluate after 12 months.  

As we will be renting in a capital city, this is very expensive and we could definitely do with some help towards the cost.  We are fortunate in that we don't need this upfront, so we can wait 12 months if need be (i.e. we can muddle through provided we get something back in 12 months).

So we will have approx £400k from the house sale, but need a return.  We are fairly risk averse.  

There are so many options - and not averse to hearing yours!! - but the main ones appear to be:

1. Keep the house and rent it out - but this will mean it is difficult to liquidise the assets when we need to - and of course CGT.
2. Buy 2 flats in UK and rent them out - better return than option 1, but this will mean it is difficult to liquidise the assets when we need to - and of course CGT.
3. 12 month Bond - but probably at a lower rate than inflation.

Anything else??  E.g. can we open some Swiss bank account type of thing that we don't know about??

Thanks for all your help in advance.

Option 2 seems totally impractical in the time scale. Could take you 6 months to sell your house and buy two flats.
Option 3 - losing out to inflation at the moment is inevitable.

masonic

You'll only have temporary high balance protection on the money for a period of 6 months. Thereafter, you'd need to have confidence the financial institution you kept the money with that's above the FSCS limit is not going bust. NS&I would be the safest option, or split the money so it is all FSCS protected.

You have little to lose by going easy access (or notice account) during a period where rates are rapidly being hiked. Nobody knows what inflation in the 12 months following your house sale will be, nor where interest rates will end up. Of course you may struggle to switch accounts after leaving the UK, but locking the money away for a year seems a bit restrictive. What if something happens and you need to change your plans?

sevenhills

Get a trusted family member to live in your house and lodgers can stay in the other rooms. Much less risk than renting out the whole house.

wjr4

Put with NS&I

threlkeld53

Also depends on the timescale. How long will it take to sell the house and when are you moving? You could move abroad with with all good intentions, but it may not work out. Nothing's guaranteed. With that in mind the above suggestion by 'sevenhills' is something very sensible to consider.

There are a further 3 Bank of England Monetary Policy Meetings between now and mid December. So if the base rate is increased again, especially in all 3 meetings, the savings rate for 12 month bonds could be approaching 4.5% to 5% by xmas. Worth keeping that in mind, since you said your appetite for risk is low.  

Albermarle

At least if you keep the house, you can always come back and live in it, if the move does not work out. Unless you are not that keen on it in the first place of course.

Brie

Do be aware that many UK banks will not allow you to have accounts if you are living somewhere else.  You might want to check out what's possible via the Channel Islands so you are more international.