rent or buy shared ownership

[allotment10]

hi, ab doesn't seem to have a personal dilemma topic so i'm hoping for some friendly & helpful advice from you guys as me & hubby are in a bit of a dilemma, let me explain.. my husband is 62 & disabled,i'm 50 & disabled, we own our own house ,( no mortgage left to pay) but am wanting to downsize & am looking for retirement flats (due to our disabilities) as house is to big for us.The house is now on the market and we have seen 2 properties that we are interested in so have 2 options what to do -option 1 - is to buy a 2 bed roomed retirement flat (with residential manager on site) at the price of �75,000 (3/4 share),then there is a monthly service charge of �77.00 per month, not including water rates or tv licence, the flat itself needs quite a lot of work doing to it as it hasn't been updated for a number of years so would need at least �2 -3000 for new kitchen/bathroom plus redecorating (as the previous owner was a heavy smoker) .
option 2 - to rent a one bedroomed retirement flat with a housing association (warden on site) at �330.00 a month but the tv licence would be only �5.00 and the water rates are included in the monthly rent, there is no work hardly needed in this flat as opposed to the other one. Taking in we will get between �80-85,000 for our house, then there is the soliciters fees , estate agent fees, buying & selling is obviously more expensive than just selling,, we do have some savings but don't really want to dip into them as they're for emergencies only! We would welcome any advice or help as we're in a bit of a pickle over this one, :-/

[EverClean]

If the profit from the sale of your house realised �75,000 then this invested would need to earn you 5.28% in net interest to cover the �330 per month for option 2. Then there are gas/electric and other living expenses to meet.
In option 1 you will still have to meet a �77 per month service charge and living expenses.
Are there any guarantees of the monthly fees? Or are they likely to rise? Both options have someone resident for emergencies, etc - so that is comforting.
Not an easy question to answer and the answer will probably lie in the question - Which one of these do you WANT to live in?

[allotment10]

have been told that the monthly fees obviously rise in time (in both options), and looking at my question (again!) and your answer you've helped me clarify a lot of things that were niggling me, thanks so much for taking time to reply, cheers :-)

[themas]

If I've got you right, you say in Option 1 that you are buying a 3/4 share for �75K and there is then a service charge of �77 p mth. You don't mention any rent payable on the 1/4 share you are not buying. Is there any, or is it part of the service charge?

I don't know what your joint income is, but if you rent and your income is low enough you may qualify for housing benefit. This could alter the financial equation but, as Everclean says, which one do you want?

[allotment10]

with our joint incomes & private pensions we don't qualify for any housing benefits or rebates as we exceed just over the goverment limit, in option 1, the other 1/4 share is owned by the company that sells the properties (sorry, didn't say it is leasehold) , they are responsible for the maintainace of the outside only of the property, so therefore the cost & refitting inside would be our responsibility, which would take quite a chunk out of any profit we made from our house sale, whereas in option 2 the only thing we are responsible for is the decorating inside, so would have that extra money to pay the rent for the next so many years,
do we really want to own a property again with all the rising costs etc, or pay a rent and let them do the worrying, i think thats what i was really asking you guys! to make our minds up for us! well, after another night with it going round & round you both have been a great help & correct, which one do we want? after a lot of ins & outs we have finally decided to go for the rented option so hopefully we'll have a reasonably stress free life just paying the rent!
thank you both again, :-)

[WendyS]

A couple of other practical points to think about. Would you feel really cramped in a one bedroom retirement flat living on top of each other if you're both disabled and unable to get out much?. What if somebody wants to come to stay, or one of you is really unwell and needs to sleep in another room for a while to avoid disturbing the other? What if you just want to get out of each others' space for an hour or so wouldn't an extra bedroom be useful?

If you rent in future, and invest all the capital from the sale of your house and one of you at a later stage has to go into residential care, probably one half share of your invested capital would have to be used to pay for care home frees. If one of you remains in your OWNED property, the local authorities would have to disregard that.

I know this doesn't help your dilemma - probably only gives you more complications to think about. Sorry !

[allotment10]

hi wendy, did think about only having the one bedroom but don't think that will a problem as the lounge is large enough to take a 3 seater settee (if we need to sleep separate sometimes) also the rented flats contain a guest room (adjacent to the main building) for any family visiting, so that's not a problem, there is also a common room,(for all the residents & guests) also gardens that you can sit out in and you get a square plot of your own land to plant or do whatever! (thats why it costs �330 a month!) I don't quite understand about the care home fees , if one of us needs to go into residential care (in the future) i always thought if we still owned our own property then we would have to sell to pay for the costs anyway, but if we are in rented property and we are using our capital to pay the rent & expenditures to live on what would happen then if one of us did go into care, ? oh my gawd!!!, i see another sleepless night coming on! i suppose we would have to use all the rest of our savings to pay for it , then how would one of us pay for the rent etc? ! :~/