Selling up and renting - good idea or not.

Obelisk29

Hi,

Not sure if this is more Investments & Markets, so mods please feel free to move.

Was looking for a few peoples opinions on this.

My dad, who is in his mid 70s and a widower, is thinking of selling his house in Bray (value about €750k, no mortgage) and moving in to rented accommodation a bit closer to myself and my family.

It's partly because he thinks that the housing market has peaked but also because he's getting a bit old to manage a fairly big house with a huge garden.

He's on a pretty decent pension (ex-esb - now I know why our 'leccy bills are so high!), so covering rent from his pension, interest on capital would be no problem to him but he'd be a bit worried about having to move every year or so.

Personally I think it's a great idea but my brother who is temporarily living at home after returning from overseas is less keen. I can see his point of view, but I'm sure my dad would help him out with a deposit on a place of his own.

Ideally he'd look for an unfurnished place that he could get on some sort of rolling long term lease.

Are landlords ameniable to long term leases - especially for older people - and is there any difference in tenure between renting an unfurnished place as opposed to furnished?

Do people think this is a good idea? Any idea of the pitfalls of doing such a thing.

TIA

O29

Sponge Bob

Its a very good idea if he can enjoy the money he releases and has his health and some plans , are you sure that your brother does not see the oul fella partying up the brothers 'inheritance' ??

He should not have to move every year either, a one year lease is normally renewable so geta written commitment from the potential landlord.

I can safely say that my retired oul fella now has more disposable money than he had most of the time while he was working, he was actually last heard of in Dubai on saturday .

He is not renting but he downsized his house last year because it was a good deal so he got a far more practical house for when he gets less mobile in future ...sometime ... and he pocketed about €300k .

Some apartments are not great for mobility impaired elders , do note that even at this stage .

Zambia

The only downside is that he may not have an actual house to live in if a lease expires and is not re-newed. If that happens he may end up living with....You ?

So I would check out the legality of renting long term and how easy is canceling his right to live there. Chances are as he gets older he wont want to be moving about.

Have you thought of the downsizing idea?

Obelisk29

Yeah, the thoughts of him moving in with us does send shivers down my spine - much as I love him, that would be too much to bear.

He's thought about buying a smaller place, but even a one bed apartment round here is going to cost 450k and then add on the 6% stamp duty.

He'd be of the opinion that the housing market has hit the top of the cycle, so if he buys again then he's not likely to see much capital appreciation.

Renting would cost him around 15k p.a. but the interest generated just by sticking the money in the bank would more than cover that and his pension is close to 50k, so it's not really a money thing.

I think he just likes the idea of renting, it would just be security of tenure that he'd be worried about.

antoinolachtnai

If you are in a position to do so, you or your brother could buy an apartment and rent it to him. The rent would cover most of your interest payments, and you could be comfortable that he would have somewhere to live as long as he wants it. You might be able to get a lease drafted to meet this requirement.

Just an option. Might suit you, or it might not.

In the open market, he'd only really have to move every four years, at most.

Another possibility is to hold his property and rent it, and use the income from this to pay rent.

A lot of this comes down to a judgement on the best way for him to manage his tax liability.

Mailman

Buying a smaller house doesn't seem like a great idea.
There is less "value" at the bottom end of the market than at the middle and top.
The transaction costs and stress of purchasing a new house count against it too.

If your father has a large pension then isn't he paying income tax; if so isn't there tax relief on rented accomodation which small as it is still helps swing the pendulum toward renting.

Renting unfurnished is probably the best bet for him as he already has furniture so look at new developments in the area and contact the agent for them expressing interest on the condition that it's let unfurnished and at a discount to going rate. Demand a two year lease agreement. If the owner of the property has plans to make some capital appreciation and sell quickly they won't agree to it so you'll know where you stand.

In times of high inflation a big pile of cash is worth less every year but I don't believe the property market in Ireland will guard against inflation going forward.

antoinolachtnai

What is the point in a two-year lease agreement? Any lease longer than six months effectively gives you tenure for four years.

I agree with your observations about there being less value at the bottom-to-middle of the market. If you could find some way to hang on to the larger property, maybe it would make sense? You have to look at the tax side of things though.

Mailman

legally no lease of any duration counts for much here in Ireland as the landlord can dig up a son or daughter who suddenly needs the property or need to put the property on the market but if they are willing to commit to a 2 year lease it shows they might have some intention of not turfing you out and want a stable tenant.

is_that_so

It appears that longer leases may also be subject to stamp duty.

A couple of suggestions from me.

One of my grandaunts sold up her place for a not inconsiderable sum and moved into a much smaller place and found herself with an extra lump sum to enjoy life.

The brother of a neighbour is building a "granny flat" beside his own house and his mother is moving in there. His mother is selling the house to his sister is at a "family rate" and the money goes to her mother who is paying for the granny flat.

IMHO at his stage of life he deserves security, something renting really doesn't offer, at least not in Ireland.

Victor

Would you father consider one of the independent living type complexes. Essentially, you live and own your own house / apartment, but there is a full-time warden there for emergencies and a common room for interaction.

Is it wothwhile for one of the children to move in with your father and either pay rent or buy the house.

The rental tax break is minimal (about 500 euro/year).

Does your father recieve any benefits that are linked to his non-residential assets?

AFAIK residential leases only attract stamp duty when they are over 20,000 euro per year.

ponygirl

Hi Obelisk29,

I recently returned to Ireland after 10 years or so in France (aside: talk about a welfare state, the French really know how to take care of their elders and renters... ) Anyway, as I'm renting for the time being, I spent quite a while looking for a good rental - and have to say was pleasantly surprised to find quite a few professional landlords who are definitely in the business for the long term. Worth taking some time to research the market, do a bit of legwork and ask around the letting agents. We're in South Co Dublin, very happy with a good deal on a fab rental, and as it's in a complex managed by the owning company, the common areas, garden etc are really well maintained and as they have a vested interest in security are more than happy to keep an eye on things whilst we're on holidays etc.
This type of landlord might be worth seeking out for your father's situation - might give that peace of mind re tenure. AND remember that in an unstable or fluctuating market a long term stable tennant is worth his weight in gold to somone taking care of multiple properties - so much so that deals can always be done on rent! Good luck ;-)


-P-

Mailman

Victor wrote:

The rental tax break is minimal (about 500 euro/year).

It'd buy plenty of Werther's original caramel candies! : )