London of course operates in its own 'bubble' as good quality London property is now effectively an international reserve asset with no shortage of foreign buyers and substantial rents. A two bed flat somewhere fashionable could set you back £500 a week in rent. £26,000 per annum at compound inflation of say 3% over 20 years. As you can see the effect is magnified.
Now the kids leave home. Often, the best decision for people is to trade down - sell a property which is too big once the children have left, buy a smaller one and release a cash sum perhaps to set the kids up in their home or invest. In other circumstances, the individuals may for personal reasons wish to stay in the family home and equity release is then the most suitable choice.
Obviously if we are talking a buy to let you must take into account the rent net of interest will be subject to tax at your marginal income tax rate.
One option is the lifetime mortgage repaid on death the other the home reversion where the couple sell their home but occupy it until their deaths. Read on for tax planning fun below.
While reflecting on IHTA84 s162b lets not lose sight of the fact what a good investment (and pension fund) the family home is.
— Morning chorus (@ianbrealey) December 9, 2013