sell a second property or take equity release to give me money to spend?

TorkseyFern

Sorry about the section I have chosen there was nothing specific to Equity Release.
Here goes anyway.
I am asking this for a friend as they are weighing up what they could do in the coming months.
They have a property currently rented out and when that rental comes to an end they would like to either sell it or use an equity release company as they don't want the hassle of renting any more.
They own another home which is their main residence and want to stay there. Stay there that is until they might have to go into a home for example. 
The person does not have any immediate family to take into consideration as far as inheritance is concerned. In saying that they would like to leave something to someone who is a long term friend, not a relation. 
Basically they are asset rich and cash poor I think the terminology is.
As they have no one to leave anything too should they take the equity release and keep the second property bearing in mind if they sell they would have a big capital gains tax bill as they have owned the second property for over 20 years.
The property is worth about 250k,.
I know there will still be bills to pay on the second property, council tax, insurance and standing charges for utilities etc but I think this would not come close to the capital gains tax charges.
They are a lower tax paying person in their 70's.
I hope I have covered it enough to get a layman's answer if not let me know.
Don't worry I wont hold you to your answer.
My thoughts are they should take the equity release, therefore keep the second property and when their time comes to pass, that can be sold and whatever is left over can go to wherever they see fit.
Or am I thinking about this too simply?
Any thoughts?

Keep_pedalling

Equity release is for those with no other option, I would rather pay the CGT than go down that route. A third option would be to move in to the rental property and sell their current home.

p00hsticks

My view - Sell it.

You say that the owner is asset rich but cash poor, so the objective should surely be to readjust that balance. 

The council tax on an unoccupied second home - which is what it will become if not rented out - is likely to be twice the standard rate, depending on the council, and the premium will likely increase the longer it is left empty. Insurance for an unoccupied property will also be higher than if it was occupied. If the owner has little savings then those expenses are likely to impinge on the owners day to day standard of living. 

ther may be CGT to pay, but it'll come from the sale proceeds and still leave the seller with extra cash in the bank and none of the expenditure needed to retain the property. 

gwynlas

In their 70;s they could live for another 20 years and an empty property will detiorate if not maintained besides all the costs that accrue.
They are best off selling and paying CGT now rather than leaving two properties for their executor to dispose of.

Emmia

Like others I'd sell the second property. What benefits do they think they'll get from equity release? Is there a reason they want to hang onto the property?

silvercar

They have a property currently rented out and when that rental comes to an end they would like to either sell it or use an equity release company as they don't want the hassle of renting any more.

I don't understand this comment.

Equity release just creates a mortgage situation and you still own the property. I don't think it fulfils the need here. Releasing equity and leaving it empty means you still have the running costs with no income from it. Either sell it or rent it out through an agent.

If you had benefactors to consider then the equity release interest and losses on the property moving forward may be less than the CGT bill. But without that concern, logically I would sell it.

silvercar

@TorkseyFern, I will move this to the housing board.

Albermarle

gwynlas said:

In their 70;s they could live for another 20 years and an empty property will detiorate if not maintained besides all the costs that accrue.
They are best off selling and paying CGT now rather than leaving two properties for their executor to dispose of.

Also it is not unheard of for empty properties to be broken into and have squatters.

So much more simple, just to sell it, pay the CGT , and put the rest in a savings account.
They could make a gift to the long term friend whilst they are alive.

Albermarle

They own another home which is their main residence and want to stay there. Stay there that is until they might have to go into a home for example. 

Going into a care home is less common than is popularly thought.
Needing care at home is more likely as he gets older. Would one of the houses be maybe more suitable for someone with health/disability issues?

itsthelittlethings

Why on earth would you do equity release and leave a house empty that could provide a perfectly good home for someone?

TorkseyFern

Thanks to all that have responded with actual suggestions. I think therefore with the CGT involved they will probably be better off in the long run selling. Thanks again.