Generation Rent

 

When I started this blog and was trying to think up a suitable clickbait title, I asked myself what subjects would middle-aged, middle class, middle British people be likely to be interested in? The trouble was I didn’t think that the title, “Sex, Health, Money, Property” had the same ring to it.

An Englishman’s home is his castle – although he’s also very interested in the slightly bigger castle just along the road. His wife, meanwhile, is interested in about ten other bigger castles in a better location than the current dump, which hasn’t even got a moat.  

I’m approaching the stage of life now where I take being classed “middle aged” as a compliment. Let’s face it, I’m heading toward the Third Age and finding I’m starting to think that, instead of needing a bigger house, more space and trying to get a foot on the next rung of the property ladder, I actually need to downsize and release some of the equity in the property.

Over the last year, my wife and I decided we’d start to look around at likely places we’d consider staying in for that “Third Age” and, somewhat to my surprise, met a number similarly aged couples doing what we were doing (it was the amount we met that was the surprise, not the fact that older middle aged couples would want to downsize their homes.). They too were selling up, releasing equity and moving on. But, what was almost more interesting, was the fact that many were selling up with nowhere to go. They intended to rent until they spotted that house of their retirement dreams and could bid for it as a cash buyer.

We were considering doing the same, because we knew from previous experience that the only thing that trumps a ridiculous over-bid on a property is a cash buyer who isn’t in a chain and can be pretty flexible on moving dates. It’s a big advantage when a desirable property pops up to not to have to say, “Oh, we’d need to sell our house first before we can buy yours”. When you’re the seller, this feels like you have two properties to sell before you can move on – theirs first, and then yours – but someone offering cash, well, it’s a done deal.

So selling and renting was our “secret strategy” that would enable us to grab that little rose-covered cottage when it came up. That’s a laugh. It began to look like we’d be up against at least half a dozen grey-haired cash buyers trying to do the same thing. So, yet again on the property front, the question of whoever had the biggest pockets would come into play.

Now I’m pondering two things (1) has this come about because there is a massive amount of rental property options out there in attractive locations which offer quite good value for money? And (2) if so, and if we find a place we like, why shouldn’t we just rent until it’s our time to move on to the Big House in the Sky?

I’m finding the latter idea growing on me. There’s a lot of advantages to renting. For a start, we’d have to jettison a lot of the sheer junk we’ve accumulated over the years (one of the things that puts me off selling the house is the thought of literally packing up.) The thought of “living light” with a lot less material possessions appeals to me. Then there’s the money freed up – I reckon selling our house will transform those bricks and mortar into a substantial wedge of wonga that I can invest. I mean, over the years, my investments have pretty consistently delivered a return of between 5% and 10%. If I could keep that up, I’d be generating an income that would more than cover any likely rental charges.

Selling up and renting also gives an element of flexibility – I often fantasise about heading to warmer climes for the winter. Santa Barbara, California, from about October through to March would be nice. It might also be a real option if I could trust and count on the investment income generated from the sale of my home. I could live six months abroad and not worry about my house going on fire, the pipes bursting and flooding the home, if squatters had moved in and so on.

We could live the next ten years like that, until we became bored with it (or became seriously worried about falling ill in America!) Then we could buy a property more appropriate for a couple heading into their seventies and beyond which, I feel, would look a lot different to any houses we’re currently considering buying.

When you start thinking about how many years you have left on the planet, never mind in a house, you inevitably have to think about eventually leaving all your possessions behind. Of course I’m talking about that other middle class property obsession, Inheritance. Well, let’s say my wife and I both live for another forty years (assuming we haven’t killed each other by that time.) My son will then be sixty two. I’m sure he’ll appreciate getting an old house at that point in his life as opposed to getting some of that inheritance now, just as he’s thinking of getting into the property market himself. Right. Surely, as a concerned parent surveying the current housing market from the perspective of a twenty year old wondering how on earth to save for a deposit, that’s a no brainer? I mean, I know I’m in a lucky position to be able to consider the options, but it’s a fact that many of us are, or will be in a similar position. Like old age, it’s a subject that needs thinking about.

Pondering these questions makes me think back to the title of my blog. When I think that I have to admit I’m no longer middle aged, maybe I should shuffle and change the title to reflect an older age priority of obsessions: Death, Property, Health, Money (and Sex, If You’re Lucky). What do you think?

11 thoughts on “Generation Rent

  1. Renting sounds good until your landlord gives you notice to quit. There really doesn’t seem to be a long term rental market in the UK where both sides could commit to the 5+ year terms you’d want in old age. The daft Tory IHT changes means you need to have property to get a tax break too.

    I’ve fantasised about renting in Cumbria for 6 months, so I could fell-walk on the sunny days and not feel guilty reading books when it rains. But I’m aware of the upheaval of a complete move, so it would be a matter of renting a second property while keeping the primary one going, which is more expensive, while doable. But those thoughts lead to winnebago living, shudder.

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    • Winnebago living – yes, there needs to be a blog saying how absolutely crap this lifestyle is, to counterbalance the relentlessly cheery, “We’re all going on a, summer holiday” stuff that is out there. Maybe I’ll have to do it myself. 😉

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  2. I’m entertaining many of the same thoughts. Especially as we’ve just put up with a week of the nastiest weather we’ve seen in some time….cooped up in the house because the streets are iced over is no fun now and will be less fun in 10 years time!

    You mentioned Santa Barbara—that’s a nice dream (but unless you inherit a windfall, that’s about it). I thought most Brits turned to the Spanish coast as their first pick. Or Florida. In any case, it appears you are not tied down to where you live now.

    I’m concerned, however, that your main interest in moving is money-related. Why? Doesn’t it make more sense to move when there is someplace else that you’ve already decided you wanted to move to? IMO, that would be Step 1.

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    • Financial Independence planning is one thing, living it is another. On of my favourite anecdotes is about my mate, who is a fund manager, telling me how he’s fed up listening to people worth £400m obsessing about (a)how unfair it is that some idiot they know is worth £420m or (b) that the stock market will crash and they’ll lose it all or (c) that someone will steal it all from them or (d) that they’ll die and lose it all. I think what I’m trying to say is that you’re never really financially settled and wondering what to do with your cash is just a lifelong obsession. As property is a big part of many people’s assets (esp. in UK) you can’t help but think about it.

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  3. I’m entertaining many of the same thoughts. Especially as we’ve just put up with a week of the nastiest weather we’ve seen in some time….cooped up in the house because the streets are iced over is no fun now and will be less fun in 10 years time!

    You mentioned Santa Barbara—that’s a nice dream (but unless you inherit a windfall, that’s about it). I thought most Brits turned to the Spanish coast as their first pick. Or Florida. In any case, it appears you are not tied down to where you live now.

    I’m concerned, however, that your main interest in moving is money-related. Why? Doesn’t it make more sense to move when there is someplace else that you’ve already decided you wanted to move to? IMO, that would be Step 1.

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  4. One thing to consider with the “6 months in America, 6 months in the UK” idea is the check in and check out processes at each end. Lets walk through it:

    You are in a 6 month tenancy, assuming you havent gone for a 12 month which would mean you cant leave, you would have to pack and prepare to leave the current house, and find a suitable place to rent in America which could take a few weeks, you then need to speak to an agent over there to agree the paper work and pay any agent fees and security deposit/up front rent. you’ll be paying for that whilst paying rent on your current UK place.
    Then when you leave you have to make sure the place is up to the standard when you moved in
    You’ll face a potential wait for you deposit to return, and most likely you’ll not get the full amount back because the agent will find an excuse to take a cut.

    Coming back the other way you will have to repeat the process
    Look for a place in UK
    Arrange with UK agent that you’ll take it, assuming you wont be viewing as you’ll be in USA
    Pay UK agent fees, deposit, first months rent
    Pay final month’s rent on USA apartment
    Clean USA apartment ready for check out
    Move to UK
    Have a potential wait for USA agent to return <100% of security deposit

    The short answer of what I'm trying to say is, you'll be paying rent twice in a month, twice per year. And that you'll be forking out for a deposit twice a year, only to be disappointed when you don't get all of it back each time.

    One suggestion I have, use the money from the sale of your house to boost the budget for your son so he can afford a bigger place with an extra bedroom, and stay at his (rent free) twice per year for 1 month whilst you are between rentals.

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    • Some good points, and ideas, thanks for that. Like most of my day-dreamings I won’t properly think things through until I really commit to taking action. So, if I do catch myself seriously looking at Santa Barbara long term rentals, I’ll come back and read your post to calm me down a bit!

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  5. Isn’t it pretty difficult to stay in the US for longer than 3 months? (unless you happen to be a US passport holder of course). And would you be able to rent there? And what about health insurance??
    Even the option of over wintering in Southern Europe may become similarly bureaucratically complicated….
    I also think its interesting that you (appear to) emphasise the financial aspects of the choice. Surely the point of having financial assets is not to be driven by financial priorities when deciding how to live your life – i.e. freedom and independence?

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    • You might be right about staying in the US, I haven’t really looked at the details. That’s probably because I know it’s a bit of a fantasy even if I could easily afford it. The reality of it would probably see me sitting on the beach in California, pining for snow and rain, a pub with with a coal fire and a decent pint of hand-pulled ale.

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