Jumping off the property ladder could be the smart thing to do when you retire

Jillian Thomas, financial planner and managing director of Future Life Wealth Management, in Renishaw. Photo: Antony Oxley
Jillian Thomas, financial planner and managing director of Future Life Wealth Management, in Renishaw. Photo: Antony Oxley

The number of older people living in private rented accommodation has sky-rocketed in the last decade or so.

In 2007 it was 254,000, according to research by the Centre for Ageing Better – it’s now more than 400,000.

If things continue that way, it is estimated that more than a third of those over 60 will be privately renting by 2040.

So why the shift?

Renting comes with its issues, but also some benefits.

Having to pay stamp duty becomes a thing of the past, as does worrying about managing property maintenance.

A certain sense of freedom comes with renting too, particularly in terms of location.

For example, a couple sold their flat for £55,000.

They dreamed of moving to Bournemouth, where a modest one bed apartment would have set them back closer to £150,000 and so was out of their reach.

They found a home to let on an assured tenancy, allowing them to remain in the property for life for a fee of £775 a month including service charges.

Selling to rent allowed them to liquidate their biggest asset, and free up their capital.

It’s worth bearing in mind, though, that by selling up and moving into private rented accommodation, your estate could receive a higher inheritance tax bill.

The inheritance tax exemption introduced in 2017 allows parents and grandparents an additional IHT allowance when their children or grand-children inherit their main home, and so selling your home could remove your eligibility for the exemption.

n No individual investment advice is given, nor intended to be given in this article and no liability will be accepted in respect of any action you may take as a result of reading this article.

If you are unsure you are urged to take independent investment advice.