Should I Sell, Rent Or Downsize When I Retire?
When it comes to retirement, selling up becomes an option if you’re living somewhere that is larger than your needs or no longer fits your new lifestyle. Larger homes can often entail expensive running costs, such as energy bills, council tax, household insurance and maintenance costs. In this guide we help you weigh up the option of selling up for retirement.
In this article:
- Is it better to rent or own a home in retirement?
- Selling your house for retirement
- Renting out your house for retirement
- Downsizing your house for retirement
- Finding a home after retirement
Is it better to rent or own a home in retirement?
There are many things to consider when you begin to approach retirement, and a number of changes that will need to be made to ensure you prepare yourself properly for the next big step in life.
Before you retire, one of the biggest factors you should focus on is what you plan to do with your existing home. For some, the decision to stay has already been made. However, many people approaching retirement find themselves living in a home that is much too large for them, with many vacant rooms once children have left the nest.
Other retirees simply fancy a change of scenery before this new chapter begins and choose to move home to experience a new location and lifestyle – either within the UK or abroad.
Whatever the reason is, if you’ve decided a new home is right for you when you retire, you’ll have to face another big question: do you sell your old home, or rent it out?
There are pros and cons to each, and the best choice will depend on your individual circumstances. Explore your options below.
Selling your house for retirement
Many retirees sell their home once they finish working. As mentioned above, you may find yourself living in a home that is no longer suited to their lifestyle, with empty rooms that were once inhabited by children who have now grown up themselves.
Selling your house has pros and cons, which you should weigh up in order to decide whether it’s the right option for you in later life.
Pros of selling your home:
- You’ll have the freedom to choose a new home with a location and design that supports your current needs.
- You’ll release equity, and you’ll have meaning you’ll have more money to put towards your retirement fund.
- If you invest in a cheaper property after the sale, you’ll also have more money available to put towards your retirement fund.
- A new home means you’ll have the opportunity to meet new people.
Cons of selling your home:
- If this is your family home, the property you sell will hold many memories.
- You will have to go through the process of selling your home, which can be timely and expensive depending on with method you choose.
- Your property may have negative equity, so it may not be profitable to sell your house.
Renting out your house for retirement
An alternative to selling your home when you retire is to rent it out to tenants instead. Renting out your home means you’ll effectively become a landlord, unless you hire someone to manage the property for you, but you will still own the home.
Pros for renting out your home:
- You’ll receive a healthy income from tenants to help you during retirement.
- You’ll still own your family home, giving you the option to return to it whenever you please (e.g. after travelling) or pass it on to your children in the future.
- If you still have a mortgage on the home, you can continue to build equity.
- If you’d like to explore the world during retirement, you can make money from renting while you travel – and have a home to come back to afterwards.
Cons of renting out your home:
- You’ll have to pay more taxes, including income tax and Capital Gains Tax.
- You will be responsible for managing your tenants, unless you hire a property management company to do this for you.
- Maintenance of your property is likely to be more expensive.
- You’ll have less money available for the down payment of a new home.
Downsizing your house for retirement
Downsizing is something you can choose to do at any age, but it’s a particularly popular option for retirees. If your current home is too large, costly to run and not suitable for your needs, downsizing can provide a great solution.
Pros for downsizing your home:
- You’ll release equity by selling your current home, providing you with more money to put into savings, towards your retirement fund or to relieve any financial strain.
- Smaller homes enjoy cheaper running and management costs.
- You have the freedom to change location.
- Your new home will be easier to maintain.
Cons of downsizing home:
- Just like any house sale, downsizing comes with costs – especially if you use an estate agent.
- You’ll have less room for guests, which may be an issue if you anticipate family or friends visiting often.
- You may find the move from a large home to a small one difficult to adapt to.
- You may need to downsize your furniture too, if it no longer works in a smaller space.
Finding a new home for retirement
Decided to move home after retirement? Alongside choosing between selling or renting your old property, you’ll also need to decide what kind of home you’d like to move into next.
Of course, there isn’t a property type that’s unsuitable for retirees, but certain types tend to be more popular than others. Your situation will ultimately influence your decision, but here’s a helpful list to help you start started:
- Smaller terraced or semi-detached home
If you’re still quite active and features such as stairs don’t cause you any issues, a smaller terraced or semi-detached home may be the perfect choice for you. It’s likely moving to a house like this will involve downsizing, but you’ll benefit from more space and independence than the other options below.
A bungalow is ideal if you or your partner are less active but do not require support, or if looking to move into a property where you will live alone. You will still remain a homeowner, and a bungalow will be much cheaper and easier to maintain than a larger home.
- Sheltered housing
If you do need occasional support in your day-to-day life, consider sheltered housing. Sheltered housing is a great choice if you would like to live independently, all while benefitting from a range of security features like an alarm and a warden.
- Retirement village
Retirement villages (sometimes called retirement homes) are designed especially for older people. These large developments feature a collection of houses, bungalows and apartments, and often have leisure facilities on site like restaurants, gyms and clubhouses. They’re similar to sheltered housing, however retirement villages have much more of a community feel thanks to their extra on-site facilities.
You can live independently if you wish, but assisted apartments and care services will be provided.
- Care homes and nursing homes
If you need regular care, and can no longer live alone, even with help from friends and family, then you may wish to move into a care home or nursing home. Care homes offer accommodation and meals alongside personal care, while nursing homes are able to offer all of this as well as nursing care – often an option for those who have fallen ill.
If you’re considering moving abroad for your retirement instead, don’t forget to read our Moving Abroad guide to ensure you’re fully prepared to emigrate.
Whether selling, downsizing or renting is the right option for you, you’ll still need to sell your current home first. If you’d like to speed the process along, while removing the added stress of house chains and avoiding costs such as solicitor and estate agent fees, then consider a house buying company like Good Move.
At Good Move, we’ll be able to provide you with a cash offer up to 80% of your property’s market value – all within 24 hours. On average, sales are likely to be completed within as little as 10 days. Get in touch with our team of experts today to get started.