Retirement and Renting

RETIREMENT AND RENTING

This is a hard one. 

Rental costs for landlords (Residential Rental Provider) usually increase each year which as a Renter means that your rent per week increases too. Interest rates have risen, mortgage costs have increased as has Land Tax then these costs logically result in higher rent being charged to the Renter. Add to this all the compliance legislation and changes to the Residential Tenancies Act, it’s been an expensive time to be a landlord (Residential Rental Provider), it’s a business for them so, of course, they have increased their fees/costs.

As a Renter, these costs don’t stop because you have retired. 

Will your pension cover the rent? 

Get the right advice. Speak with someone who can help you, not a real estate agent but someone who specialises in the pension and impacts on the pension. 

Rent Vesting

If you are renting and want to stay in the local area but would like to buy a home, possibly out of an inheritance or Settlement etc. then you could do what is known as ‘rent vesting’. 

You buy a home where you can maximise your capital growth and get a renter in to contribute to the mortgage. Buying the right home means that you will get capital growth and it will be a popular location etc for renters so should usually be occupied and the rent paid. 

You will need to be prepared for periods of non-rent, plus insurance, property management fees, and maintenance costs (yes, even on a brand new home there are costs). There are always taxation implications and you will need to chat to your accountant. 

Over time, the property will increase in value if you have bought wisely (generally), your renter has helped you pay down the mortgage and you have continued to live where you want. 

When you plan on retiring you will have an asset that you could sell or that you could move into. Obviously, it’s important that you have planned ahead and the home is paid off or close to being paid off by your retirement. 

You will be paying rent as well as receiving rent. The idea is that you manage this process with the right advice. I recommend an accountant and a financial planner are involved right from the start. With these professionals on your side, your retirement should be in good hands.

Other people you should involve in your rental decisions: insurance, property manager, building and pest inspectors, your lender.

Other costs: property management fees, stamp duty, insurance, and initial inspections to ensure your property has no major structural defects or active pest infestations.

As always, do your own research and ask the right people.

TOP TIPS

• Plan ahead,
• have the right people around you,
• get professional advice.

Book a MEET-UP if you would like to know more information or would like to chat about your current situation and options.