I Have A Plan

[Colin Phillips]

At the moment Mrs. P and I(55 and 60) live in a 5 bedroom property , which for various reasons we find too big.
We have two daughters (30 and 24) who have not yet found homes of their own.
My plan is to put our property on the market and move into a rented flat. The capital released by this sale to be split, 50% for us and 25% each for the daughters.

I would like some feed-back on this, have I missed something? are we being fair to our daughters?

All replies serious or otherwise, gratefully received.

Thanks

Colin

[prince regent]

not sure of the value of your house but wouldnt it be better to downgrade to a 2 bedroom flat rather than renting then with the balance buy a flat (s) for your daughters

[an capall]

Colin,

Without knowing your investments, pensions other incomes and the state of both your health it's tough to answer. As well as not understanding the personal utility you get from being a united family, and from the home and garden.

My instinctive reaction is that you are too young yet to do this. Liquidising your capital and then paying rent is basically a financial race to the finish. Have you consider a shared ownership scheme with the bank? This would release capital, and with the likely appreciation in the houses value would not dilute your daughters' legacy too much.

The other option is of course to throw out your daughter's and keep it all for yourselves. As someone once advised me, 'fly first class, 'cos if you don't your kid's will'.

[Kathy]

Why not just downgrade and purchase a smaller house/flat Colin? If you and Mrs P brought a smaller house/flat, and then gave each of your daughters money towards deposits for a house/flat of their own perhaps? That way, you are still on the housing ladder, you can release some of the capital and you can give your daughters some of their inheritance early. Once that is resolved you and the lovely Mrs P can spend the rest on yourselves having a damn good time or just invest it in high income bonds, cash ISA's or a few good racehorses ! Just a thought.....

[Ardross]

Renting is a bad idea in such circumstances - remember that tenants since 1997 and since 1989 if a notice was served in advance in the private sector have no security of tenure and can be chucked out at 2 months notice .

I would agree that downsizing would be a better idea

[terry]

I wouldn't give anything away at this stage.

Perhaps you could buy two flats and let one of them. In 2006, I think that you could buy residential property through your own pension scheme and the rent and any gains would roll up tax free. But you need the income to get enough funds into the pension scheme to buy the flat, or a big fund in the first place.


If it were me, I'd sell the big house, buy a smaller one, and keep the money and spend all or some of it on things that I really wanted to do.

[Melendez]

You could still be renting in fifty years time!

[Songsheet]

Downsizing is all very well on paper but, as one who has actually done it, a word of warning on the personal front...

We moved from a very large house (5 bed Vicarage plus coach house) to the current property, which had everything we were looking for re land, position proximity to office etc BUT was about one third the size of the previous house. We spent first 6 months redoing the very basic 60's box to provide two large bedrooms, usual en-suite plus family bathroom upstairs and the downstairs to provide utility room, big kitchen and very small sitting room.

Our plans were to live in it for a while, while applying for permission to build an extension. Which we did but living in such a small space after having had such a very big space was NOT a good thing!! It aggravated problems we already had as we had worked together for 13 years. Even though the extension was built and it is now a lovely house, the damage was done and we are now separated.

I am not saying this is what will happen to anyone else downsizing but it was quite a big factor for us that we hadn't foreseen and maybe a useful point to consider!

As to helping your daughters - well, most parents want to do that - my take is that freeing up capital to provide deposits for their own propertys is a very good move but that would be as far as I would go - the rest would most definitely be down to them to help themselves.

[Merlin the Magician]

I worked with a guy years ago(a lot older than me) met him again about 12yrs ago and his wife had just passed away (big C) .

He did what your thinking of doing now, he sold the property (a terraced cottage) for its market value 30k odd then... now they sell for 90k I met him last week at Tesco's ask him how he was doing and where he was living? he said he still lives in rented accommodation I bet there's not much if any!! of his capital left now after shelling out the rent for all these years......................

[Maurice]

Tell your daughters to sort out their own properties!!

Sometimes I reckon we parents are far too indulging...

If Moette thinks she's getting her mitts on the old adobe hacienda she's in for a nasty surprise - I'm using the filthy lucre to retire to a ludicrously filthy life in Spain.

[Colin Phillips]

Melendez, check the OP, if we are paying rent in 50 years time I will be the big 110!

An I am on an occupational pension which will cover the rent, my wife's health is not very good. Physically, besides being about 3 stone overweight, I would say I was in good nick for my age, but I am on anti-depressants.

Ardross, the sort of flat we are looking at is leased on a Short Term Guaranteed Tenancy (or something like that). Your comment about being chucked out with 2 months notice is a worry.


Thanks everyone for the input, please keep it coming.

Colin

[Melendez]

Melendez, check the OP, if we are paying rent in 50 years time I will be the big 110!

The problem is that people are living a lot longer than they had planned. It is no longer that uncommen, for women especially, to live full lives well into their nineties and occasionally beyond.

[Songsheet]

It is no longer that uncommen, for women especially, to live full lives well into their nineties and occasionally beyond.

Bloody torment, too - you're old, the old man's six feet under and so not there to moan at...

Think the majority view is safest - keep on the property ladder with a smaller property - reliance on State provision for pensions and healthcare isn't going to be an option and if there's a health issue at stake, then having a decent capital reserve to draw on will be essential.

I agree with Mo - having now spent thousands and thousands on the son and heir's education etc, apart from lending a hand with a deposit some time in the future, he's on his own from now on!

[Ardross]

It might be worth investigating terry's idea of a Self Invested Personal Pension as these will be allowed to include residential property after April 2006 in certain circumstances

[Shadow Leader]

I'd just like to say to all those who say kids are overindulged - my old man hasn't given me a bloody penny!! He'd rather spend his considerable amounts of cash on his tart or her 2 young kids as a last ditch attempt to make up for not being around whilst my brother & I were kids, he was too busy 'working hard' on a bloody golf course.....

[Ardross]

Colin - most tenancies in the private sector now are assured shorthold tenancies unless the landlord notifies the tenant in writing that the tenancy will be an assured tenancy.

The effect of an AST as they are known is that they have to last for a minimum of six months and they can go on for ever if the landlord and tenant wishes . The problem however is that the landlord is in complete control- he can bring the tenancy to an end by giving two months notice . He will have to get a court order if you refuse to leave but he does not have to prove any ground for possession such as nuisance or rent arrears .

At your age i would be very loath to go into a property like that without an assured tenancy . If the tenancy is assured , although it is not subject to rent control save to a very limited extent ( if the landlord charges a rent significantly above the market rent ) it does have security of tenure i.e a landlord would have to show a ground for possession e.g breach of tenancy, rent arrears nuisance etc and that it was reasonable to make an order . Landlords , especially in areas of good demand very very seldom can be persuaded to grant such tenancies .

Renting in the private sector ( a housing association may be different but very unlikely to rehouse someone just becuase they are downsizing ) is a very precarious course for anyone approaching retirement