If the cost of running your home is half your income, is it worth the expense to stay?
Running any household is expensive and when you’re retired your income is unlikely to be as high as when you were working, yet you still have to pay for your home’s running costs. Some bills might even be higher if you are at home for most of the day. So, you may ask yourself the question – is it worth the expense to stay?
What does it cost to run an average 3-bedroom house per month?
In a recent study, MORE TH>N found that the average running cost of a three-bedroom home in the UK is a staggering £18,197 that’s (£1,516 per month). This means that half a couple’s earnings (who are both earning the average UK annual salary of £27,271 per year) is spent on household bills.*
Graham Nicholls, head of home insurance at MORE TH>N, comments; “The report looks at average homes and average costs. Just as last year, it’s clear that most people are financially stretched putting a roof over their heads and paying their bills – spending most of their income before buying other regular necessities such as food, commuting, petrol or insurance.”*
If your retirement income barely covers these costs, there won’t be much money left over to do the things you enjoy in life such as playing golf, going on holiday, or simply eating out at a restaurant regularly, so it might be time to revaluate and weigh up the pros and cons of running a family sized home.
What are the alternatives?
When considering downsizing to a smaller property, it’s important to think long term. Ideally you won’t want to move again as it can be stressful and expensive, so consider what you will need in order to remain independent in your own home for the next 20 odd years.
A privately owned retirement apartment provides a ‘home from home’ alternative with the bonus of a built-in community. The apartments are designed so that you can move in when you’re 60 and enjoy a lovely modern home, but as you get older they already have the mobility and safety features you might need, such as alarm cords and wet rooms.
Retirement developments have additional facilities such as communal lounges and guest suites and may also have an on-site restaurant, health suite, electric scooter store, laundry service, parking, communal garden and function room. Residents who live in these developments benefit from being around like-minded people and get the opportunity to be involved in a social community.
On the surface a retirement property seems like an expensive option, with ground rent and service charge to pay. However if you consider what is included in the charges compared with the money you pay annually to run your current home, you may actually end up paying less.
If you are on your own, a potential way to save on living costs could be to purchase the apartment and rent a room to a friend, as long as they meet the age requirement.
A standard apartment is certainly a cost saving option. Although you’d still need to pay ground rent and a service charge (most flats are leasehold), you won’t need to pay for the security and staffing of a retirement property, or some of the communal facilities. The neighbours are likely to be of different ages, so although there may be some community spirit, people are more likely to keep to themselves. As you get older, living in a flat may become isolating. In addition, the level of security might be lower, for example, while there may be CCTV security cameras on the entrance, there is unlikely to be a manned reception. You may also have to pay to adapt the property for mobility and safety purposes, for example installing and maintaining asecurity cord.
If the idea of a flat sounds appalling, a bungalow is a good alternative as you won’t need to navigate stairs. However, even though some running costs are lower, you will still need to take care of the usual home and garden maintenance costs, insurance, council tax etc. You may also need to spend money decorating to make the property feel like home.
Rent a retirement apartment
Renting an apartment is also an option, however when renting a property, the tenant is bound by the rules of the lease and you may have to move when the lease expires, so this offers little in the way of security.
The study revealed that the household costs of a rented three bedroom home was slightly less expensive than that of an owned home at £17,657 per year (£1,471 per month).
What does it cost to live in a retirement apartment?
Retirement apartments can range from £55,000 to £600,000. This largely depends on the age, size and location of the property. In addition to the purchase price, you will need to pay a monthly service charge that’s paid directly to the development.
Service charges vary widely, however. For example, at Emma Court, a Retirement Living development in Basingstoke, the service charge was £35.35 per week for a one bedroom apartment between 1 April 2015 and 31 March 2016. For a two bedroom apartment, it was £53.03 per week.
At Lady Susan Court in Basingstoke, a Retirement Living Plus development, the service charge was £118.85 per week for a one bedroom apartment and £158.59 per week for a two bedroom apartment.**
The other main bill you will have to pay is council tax as most of the other utility bills are taken care of under the service charge – enabling you to budget more easily. Contact each individual development to find out what is covered.
RetirementMove has over 300 retirement properties for sale across the country. Why not take a look at retirement apartments available in the North of England.
Or take a look at retirement apartments available in the South of England.
It is advisable to consult a financial advisor when considering a purchase.
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