Se­nior cit­i­zens now sell up, cash in, drop out

Re­tired home own­ers are sell­ing up and cash­ing in on their properties to be­come part of Gen­er­a­tion Rent. Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

MORE home own­ers are step­ping off the prop­erty lad­der to join the 25 per cent of re­tirees who al­ready rent, ac­cord­ing to new re­search by Pru­den­tial.

More than 40 per cent of re­tired renters are for­mer own­ers who sold up to re­lease eq­uity tied up in their bricks and mor­tar.

A new study by Pru­den­tial re­veals that the rea­sons for sell­ing were largely fi­nan­cial, though a grow­ing num­ber saw rent­ing as a life­style choice.

Two in five were forced to put their home on the mar­ket to pay off debts, 19 per cent needed to re­lease funds in or­der to cover the cost of a di­vorce or sep­a­ra­tion and nearly one in ten sold up so they could use the money to boost their re­tire­ment in­come.

Oth­ers de­cided to sell their home and rent so they could help their chil­dren fi­nan­cially. Seven per cent used some money from the sale of their prop­erty to help sons and daugh­ters get onto the prop­erty lad­der, while nine per cent used part of the pro­ceeds to help sup­port their off­spring in other ways.

Les­lie Jones, 68, from Hud­der­s­field, is sell­ing his £200,000 semi to re­lease cap­i­tal and dis­pense with the up­keep of the three-bed­room house.

He al­ready co-owns an apart­ment in Spain with his brother, which he uses for half of the year, and he plans to rent a two-bed­room apart­ment in York­shire.

“I have a fi­nal salary pen­sion, which I can eas­ily live off, and I have some sav­ings put by for a rainy day. Even with low in­ter­est rates and in­fla­tion I’ve worked out that I can af­ford to rent for the rest of my life.

“I have al­ready helped my son onto the prop­erty lad­der and he is set­tled so I don’t feel that pro­tect­ing his in­her­i­tance is an is­sue.”

Les­lie is look­ing for­ward to trav­el­ling more when he be­comes ten­ant. “I’ll use some of the money from the house to travel, which is why I want a flat that I can lock up and leave with­out wor­ry­ing about it. The other ma­jor ben­e­fit is hav­ing no prop­erty main­te­nance or un­ex­pected bills.

“The only neg­a­tive is other peo­ple’s reaction. They think I’m mad to jump off the prop­erty lad­der when the mar­ket is im­prov­ing and the value of my house looks set to rise. My an­swer to that is that if I keep the house un­til I die I’ll never see the money any­way. I in­tend to en­joy it and travel more while I am still fit enough.”

Al­though Mr Jones is well­pro­vided for fi­nan­cially, Pru­den­tial is warn­ing pen­sion­ers to take pro­fes­sional ad­vice be­fore cash­ing in on their home to be­come ten­ants.

Its sur­vey shows that re­tired renters pay an aver­age £423 a month for their let, which is twothirds more than the aver­age £257 a month paid by re­tirees who still have mort­gages. It cal­cu­lates that the aver­age rent will ac­count for nearly a third of the aver­age ex­pected re­tire­ment in­come of £15,300 a year.

Stan Rus­sell, a re­tire­ment ex­pert at Pru­den­tial, says: “Rent­ing in re­tire­ment can make fi­nan­cial sense and ac­cess­ing prop­erty wealth to boost re­tire­ment in­come is a gen­uine so­lu­tion for many. Our re­search shows that many re­tired renters are per­fectly happy with this ar­range­ment.

“How­ever, peo­ple should be aware of the ex­tra fi­nan­cial bur­den they could be tak­ing on if they choose to sell up and rent. I would urge ev­ery­one in the run up to re­tire­ment to speak with a fi­nan­cial ad­viser to help them plan and save for the in­come they’ll need to cover their costs when they stop work­ing.

“The fact that some re­tirees say they are be­ing forced to sell up purely be­cause of the need to pay off debts is con­cern­ing and sug­gests they are not re­ceiv­ing pro­fes­sional ad­vice. Or­gan­i­sa­tions like the Money Ad­vice Ser­vice and Cit­i­zens’ Ad­vice Bureau of­fer free ad­vice and can help enor­mously in th­ese sit­u­a­tions.”

Si­mon Ketteringham, from Castlehill Es­tate Agents in Leeds, says: “I can un­der­stand why re­tired peo­ple think about sell­ing to rent, not least be­cause it pre­vents un­ex­pected costs. If some­thing goes wrong with their home they can just ring the land­lord to come and sort it out. I can also see why peo­ple sell and re­lease eq­uity if they have debts or are strug­gling to sur­vive on a pen­sion.

“The main is­sue is that the length of most ten­an­cies is un­cer­tain. Rental agree­ments are usu­ally 12 months at the most and the land­lord can de­cide to sell at any time leav­ing you to find a new home.”

Si­mon sug­gests there could be a gap in the mar­ket for in­sti­tu­tional in­vestors to cre­ate pur­pose-built re­tire­ment apart­ments to let.

“There ap­pears to be a mar­ket out there and rent­ing to re­tired peo­ple would be a good in­vest­ment,” says Si­mon. “They tend to take good care of their homes.”

Over­all, 15 per cent of re­tired renters choose not to own their home as a life­style choice, while 35 per cent rent be­cause they don’t have enough money for a de­posit and 41 per cent can­not af­ford home own­er­ship. The ma­jor­ity of re­tired renters, 58 per cent, have never owned a home and nearly three-quar­ters of them plan to con­tinue rent­ing for the fore­see­able fu­ture.

UP­DATED: Porch House has his­tory be­cause of its fa­mous royal con­nec­tion – King Charles I stayed there when un­der ar­rest two years prior to his ex­e­cu­tion – but it also has con­tem­po­rary lux­ury be­cause of a re­fur­bish­ment that has earned it a five-star...

CASH­ING IN: Rent­ing is be­com­ing a life­style choice for se­nior cit­i­zens who want to en­joy their money, while for oth­ers it’s a case of needs must.

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