Home ownership in old age
Home ownership is a key issue for many people — particularly in the second half of their lives. What options are available, and what are the key considerations?
Owning your own property is often the result of a lifetime’s work — and, at the same time, your largest asset. As you get older, the question arises as to how this asset can be put to good use, passed on or realised. There is no one-size-fits-all answer, but there are options you should be aware of before making a decision.
Stay in your home, make the most of your capital
Arrangements such as selling the property whilst retaining the right to live there, or a life annuity, make it possible to free up capital whilst still remaining in your own home. In the case of a sale with the right to live there, ownership of the property is transferred, whilst the lifelong right to live there is secured in the land register; the purchase price is correspondingly lower. With a life annuity, the proceeds are paid out in monthly instalments, often with a right of residence as well. Each option has tax and legal nuances that should be carefully considered — from the value of the right of residence to the security of the annuity.
Transferring assets during one’s lifetime
Advance succession — the transfer of assets whilst the owner is still alive — also needs to be well planned. It can prevent disputes, make the most of tax allowances and ensure clarity: the question of who gets which house is settled whilst everyone is still at the table. It is common to draw up transfer agreements that include a right of residence or usufruct for the transferors, so that security is not lost along with ownership. It is important to take the statutory shares of the remaining heirs into account; otherwise, the issue will resurface within the family later on.
Rent or sell?
Some owners move into a smaller flat and keep the house as a rental property — generating an ongoing income rather than a one-off sale proceeds. This works if you’re not put off by the management work or are willing to delegate it, and if you set aside funds for maintenance. Others sell and invest the proceeds in such a way that the money remains accessible. Which approach is right depends on your health, family, tax situation and how much you still want to be involved.
Stay or move?
Before any financial considerations come the practicalities of living: is the house, with its stairs, garden and service charges, still the right home? Some owners carry out accessibility modifications and stay put; others swap their house for a flat with a lift closer to their children. Both options are valid if they suit the individual — and both should be decided whilst one is still able to make the decision for oneself.
The correct order
First the living situation, then the model, then the figures. If you start with the tax, you might end up optimising something you don’t actually want. If you start with the sale price, you might overlook the right of residence. It makes sense to have a discussion where all the options are laid out side by side — and where nobody has to sell anything.
Our role
We offer discreet and independent advice, working alongside your tax and legal advisers — so that the decision suits your personal circumstances, rather than the other way round. Sometimes the outcome is a sale, sometimes a handover, and sometimes the realisation that everything can stay as it is. All three are positive outcomes, provided they have been chosen deliberately.
