AIBU to ask if it would be a good idea to sell house and rent instead

[Telematics1234]

I have got this idea we could sell the house and put proceeds of house sale in the stock market.

We are in our late 50s and have paid off our mortgage. We are both still working. The idea of selling up and investing the capital in the stock market is appealing.

We are both still working, so have wages coming in to cover everyday expenses and rent.

I like the idea of the flexibility of renting. ie we could move house much more easily.

It seems to me that the stock market probably out performs the housing market for the most part.

Has anyone done this?

It's a huge comfort to know you own a property going into retirement. I can't imagine renting at that age. Don't do this.

As MumsNet seems to hate renters (or at least, never has a good word about renting) you won't get any support on here!
I am a tenant and I love renting, so as far as selling up your house and having capital is concerned, it's the sort of thing I would do. I am in my 60s and have rented for the last 30 years (although for some of that time my accommodation was tied to my job).

I hate being tied to one place, I like the freedom renting gives me, I can go to any part of the country or up-sticks and leave when I want to. I don't tie all my money in a property. However, I go for rents which are long term and which allow me to paint/do up the properties and which aren't going to be suddenly reclaimed by private landlords wanting to sell up or come home from abroad or whatever. I have lived in some lovely places, some of which I could never have afforded to buy but I could certainly afford to rent. My current place is now a flat but in lovely grounds and I shall probably stay here into my retirement and until I die/go into care or whatever.

What I WOULD NOT DO is put any money released into the the stock market. It's a very risky form of investment if you don't have any other security, like a home of your own. There are safer investments to be made where you can get hold of money if you want it, which you may well do if you are renting. If the only reason you are thinking of renting is to get a better/quicker/bigger return on your money by using the stock market, you are being very unwise indeed. That is not a good reason to rent.

Not per se a crazy idea but depends on circumstances. I'm based in Germany atm and have actually seen similar scenarios argued convincingly in financial columns. HOWEVER this is based on a) super solid tenant protections both against eviction and excessive rent raises, and b) a housing market especially in the South that makes buying quite uncompetitive compared to renting - think real estate prices far in excess of 20 times annual rent (when I lived in the Netherlands it was more like 14). I'd say a main reason to buy in my current location is simply because it can be quite hard to find suitable rentals in many places. I doubt much of this applies to the UK.

That said, there's an obvious middle way, which is prioritizing investment over mortgage repayments if the annual return exceeds mortgage costs. You're mortgage free but could you take out a new one, preferably locking in interest rates over an extended period? Obviously only after an extended sit down with a competent financial advisor.

@Arbeity

But what would you be wanting the money for? Surely for most people they want money to buy security in their old age. Having a mortgage free house is a huge part of that security. What would you be giving it up for? A higher number in the bank?!

If you average out house prices over the past few decades, house prices have gone up an average of 6% per year nationwide (obviously doesn'taccount for local markets). That's a very good return, even by stocks and shares standards, unless you go for high risk options or something like crypto. The problem with volatile stock is that when you need the money, you can't make sure it's at a high point, it might be at a low ebb. Then you are scuppered.

Is downsizing an option? That way you get to release some of that investment. If so, talk to a financial advisor about your goals and they may be able to give you some good options and a sensible split across high/med/low risk investment options. But remember, they are just giving advice, make you own mind up and you can always say no and disagree

Good advice. Thank you!

I'm young and this is what I'm trying to AVOID! I want to get into the housing market and out of renting so I have security in retirement, not the opposite! I can't imagine renting in old age unless it was through the council/social housing.

To add to my earlier post. When my children were small I was a single parent. We lived in rented houses. We lived in 8 rented houses over 7 years because everytime I found a nice house and moved in we would get a letter saying that the landlord had died, had decided to sell up and move to Spain etc etc. I was young and very tidy. We had no pets. We didn't have much stuff and I kept an eye on what we bought as it had to fit the house we were in and , inevitably, the next house we would be moving to. I was early 30s then and when I managed to buy a house again it was the biggest relief of my life. I just couldn't face moving again. Can you imagine doing that in your 80s or in ill health. Can you imagine lying awake at night at that age knowing the markets are crashing and one of you is too ill to be part of the decisions anymore. I wouldn't wish the stress of all that on anyone

OP, would you mind sharing what you've invested in that's doing so well?

I could do with some help. My investments have tanked.

When my dad retired my parents had a lump sum that could have bought a house which they could have rented out. Instead they got financial advice and invested it in stocks and shares. They would have made a lot more money in property IMO.

Why not go away and stay at airbnb's every weekend round the country - or abroad - if you like to move around. Having rented for a number of years and owned for more there's no way I'd go back to renting. We had a terrible time with a couple of landlords and rent is through the roof round here, there's also high demand for rental properties and they want all sorts of checks and references done.

Thanks for all advice everyone. So many posts, that it is hard to respond to each one individually.

Our youngest DC will go to uni this year. This morning, I watched a podcast from the Economist saying that cost of renting and buying are similar when taken over a long period.

It occurred to me that we could gain greater flexibility as tenants as would be able to move more easily. For the first time in our lives, we don't have to base all decisions on DC schools!

I would consider investing a small sum on the stock market, but only iof you could afford to lose it and you continually check the state of the market, where it is invested and be prepared to pull the money to invest elsewhere etc.
My mother always liked penny shares, some she did well on (Body Shop, Polly Peck) but always she read the financial pages, took advice and pulled her cash before the crash, she was always in profit and we'd regularly enjoy eg a night at the theatre etc on her winnings (yes she called them winnings as it is gambling)

Christ no. One of the reasons that the property market is so strong is that the stock market is so volatile.

Best troll ever!

OP - is this your own idea? Or has someone else suggested this to you as a way of getting rich? It's so outlandishly unwise that I'm wondering if there's a scammer involved here somewhere.

Do you have an advisor or investment manager that's investing on your behalf and telling you your stocks are rocketing? The whole scenario is feeling really familiar and not in a good way. As others have said, our stocks are not doing very well at the moment and I'd be amazed if you could beat property rises in this market...

@Telematics1234

Thanks for all advice everyone. So many posts, that it is hard to respond to each one individually.

Our youngest DC will go to uni this year. This morning, I watched a podcast from the Economist saying that cost of renting and buying are similar when taken over a long period.

It occurred to me that we could gain greater flexibility as tenants as would be able to move more easily. For the first time in our lives, we don't have to base all decisions on DC schools!

My eldest son and his wife live in Cardiff. The rental market is huge. They rent a lovely flat but fancied a change. They have given up trying to move as most things that come up for rent have gone before the listing even goes live. They found a house they liked. When he rang there were 10 viewings already booked and the agent had closed the list because it would go to one of those people. The house was pleasant enough and perfect for young people. To me , as an older person, the kitchen was tired, the carpets were naff the bathroom was dated. They are out enjoying the fabulous facilities of their city. I would hate not to be able to change all of those things. A house with all those things done would be thousands to rent each month. There is no incentive for landlords to make things anything other than safe. There are queues of tenants for even grotty places. The landlords also have the pick of tenants . An older couple may not be as appealing as a full time, professional couple. You will have no control whatsoever over that.

I'd only do this with other money... Keep the house/rent it out and use the rental income to rent somewhere interesting?

My main reasons would be:
You're secure now and you'd be risking that security MAJORLY...

All you need is sudden chronic ill health /accident and you're stuffed.

We spent SIX weeks trying to find a private rental.. We had good refs and ebojgh income... But my it's stressful and tedious.

If the housing market rises a lot when youre renting, you could be priced out returning to owning, in the future.... A pal sold her house to move in to care for ailing parents... They died, her sibs want to sell the house... She sold a very nice victorian villa in London 9 years ago... She can only buy a flat now .

If there is any financial missteps? ... You're paying a hefty rent for LIFE... Do you want to be finding x £1000 a MONTH when you're ill/poor/need to be away looking after family for example.
A family friend 'lost' houses to ex wives and has multiple kids he's still financing ... At 75 he's on the bones of his bum... (he was well off previously) as he MUST find 1100£ every month... He is STILL having to work... Hes got loads of health issues too.

Many rentals are all show... There are real and, difficult to live with issues, under the surface. We've had rotten joists /several ceilings falling in, wrecking our possessions... All in very 'naice' rentals.

Apart from all these reasons not to here....

I think you need to think WHY this is attractive?

As someone said if its just itchy feet... Could you house swap to an amazing house for 6m/12m /however long?

Or could you rent your place out for short term rental and bugger off and do short term rentals yourself ... Someone i knew has left her son and family house sitting in her paid for house...
And has taken 2 years off... She's in Bali at the mo... Via India /Cambodia /Thailand..
Shes having an amazing time!

Another issue with rentals ib UK... You are literally EIGHT weeks (plus any court time) away from eviction... And you don't have to do anything wrong... Just the landlord wants the property back...
This has happened to us THREE times... All were established landlords.... Always at a shit time too... Cant tell you how stressful this was.... YOU may be able to stay woth family /pals, but it is so bloody stressful when you have to find storage for all your belongings...its not cheap..
It cost us 800£ monthly(inc just for storage when we were between places.

What about downsizing and then buying a really good mobile home so you have the flexibility of travelling around as much as you want with the sense of freedom that gives you?

I rent because I have no other choice and like it but only because I have the security of a HA tenancy and know I’m not subject to the whims of a private landlord.

Op - surely downsizing would be better in your position? I’m assuming you currently live in a house? If so, could you down size to a modest apartment. Then you’d have some spare capital to invest on the stock market if you wish. Plus the added benefit of not being turfed out of a rented property with a months notice(!)

That is the most insane idea I’ve ever heard! You must be off your rocker to even think about thinking about it.

Jesus no

As a long term renter you’d be fucking mental. This is a miserable existence and no life.

At what point do you pull the cash out and go that’s enough now? Or just a bit more and we could get that bigger garden.

I had a relative who was completely convinced in around 2004 the market was going to crash. Sold their house, lived with friends, travelled a bit. Until about 18 months later house prices hadn’t crashed and they ended up effectively downsizing and having to put extra cash in. It backfired miserably.

The one thing you can gamble on life is needing a home, don’t gamble that.

• I say the same on the house deposit vs private education threads too!

I'm often cited as being a tin foil hat loon on here but for the love of god don't the Stock market is maxed, interest rates will increase the house market will crash (No not some return to zero thing where houses cost £5k! as people think I mean) there's going to be a massive correction this year or next.
If you must, sell rent and the day the markets crash THEN invest.

What about doing a LTB so raise money on yours to buy a new one and rent yours. The rent covers your new mortgage you get to move have something new and hopefully end up with 2 properties at the end. Less risky but a change.

Nope nope nope

Ok, it will be slightly easier to move around if renting compared to selling a house. But there are NO houses to rent right now I'm in Ireland but have plenty of family/ friends in the UK. Both places sound similar, there is nearly no where to rent right now. When I moved home in 2013 I found a flat in Dublin no bother at a decent rent. Friends now are turning up with 3 references, a months rent and a months deposit and still not getting the place. Maybe not even getting to view it as it is already gone after being advertised for a day!!

I didn't think I needed to point out the countless other reasons you'd be mad to give up your stable home as other have for you