Money Mat­ters Mar­garet Dibben

The Oldie - - CONTENTS -

Sell­ing the house it took years to buy and choos­ing in­stead to rent in your re­tire­ment sounds il­log­i­cal. In the UK, home-own­ing is so much part of the na­tional psy­che that rent­ing is re­garded as a sec­ond-rate op­tion. But, in­creas­ingly, older peo­ple are do­ing just that, and it is fore­cast that by 2040 a third of the over-six­ties could be rent­ing pri­vately.

Many older peo­ple down­size to smaller, cheaper homes to re­lease money to help chil­dren and grand­chil­dren, and to re­duce the ef­fort of look­ing af­ter a large prop­erty. Step­ping off the prop­erty lad­der com­pletely is a big­ger jump though it has its at­trac­tions: you no longer have to deal with the has­sle and ex­pense of main­te­nance and re­pairs; you can pay off your debts; or per­haps di­vorce has left you with­out enough money for a new house.

The big­gest prob­lem is that the land­lord, not you, de­cides how long you can stay in your new home.

As­sured short­hold ten­an­cies have dis­torted the pri­vate rental mar­ket and turned it largely into a short-term only ar­range­ment with no se­cu­rity. When the fixed-term lease ends, af­ter six or 12 months, land­lords can throw you out if they de­cide to live in the prop­erty them­selves or sell it. You can never be con­fi­dent that you will be able to stay in your home for as long as you want.

This is a se­ri­ous dis­ad­van­tage be­cause, as you get older, the up­heaval of

find­ing some­where new to live can be trau­matic. Also you are less likely to find land­lords who are pre­pared to take on elderly ten­ants, be­cause they might not want to in­stall mo­bil­ity aids such as handrails and ramps.

A year ago, Scot­land abol­ished fixed-term ten­an­cies – so ten­ants can­not be evicted on a whim. The gov­ern­ment in Eng­land is now propos­ing a min­i­mum three-year term, with a six-month break clause; still, there is no re­stric­tion on rent rises so this is only a par­tial im­prove­ment. You can be more se­cure by rent­ing in a pur­pose-built de­vel­op­ment, but this can be an ex­pen­sive op­tion.

Adding to the costs, rent­ing in­volves pay­ing fees to let­ting agents, though leg­is­la­tion trundling through Par­lia­ment will, from 2019, abol­ish up­front let­tin­ga­gent fees. Fees have been il­le­gal in Scot­land since 1984.

If money in the long term is your main con­sid­er­a­tion in giv­ing up home own­er­ship, there are tax im­pli­ca­tions. You will no longer ben­e­fit from the in­her­i­tance tax main-res­i­dence nil-rate band, which al­lows ex­tra tax re­lief if you leave your home to a di­rect de­scen­dant when you die.

In the short term, you will have banked a tax-free profit on your house.

De­spite the pro­posed changes, the pri­vate rental mar­ket is not ideal for older renters. There is no se­cu­rity of ten­ure and no rent con­trol, and pri­vately rented prop­er­ties are of­ten poorer qual­ity than so­cial hous­ing. The sys­tem needs a sub­stan­tial over­haul be­fore it is sat­is­fac­tory for the in­creas­ing num­bers of elderly renters.

‘She’ll be right out’

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