To buy or rent?

BWhouseButton100I have recently been asked to help with a decision to buy or rent.  As in all financial decisions there are conflicting facts and emotions to consider.

Investment Adviser Or Financial Planner?

The client is over 65 and therefore concerned to ensure their future care.  She has had the experience of owning before but has been without a property for almost two decades.

She has sufficient capital to buy a comfortable home and pensions which provide more than enough income.

Her past experience of property ownership has made her reluctant to take on the responsibility of maintenance and care, preferring someone else (a landlord) to do it.

The initial advice, from the family investment adviser, is to live on her pensions and rent a property.  He will advise her on investing the capital.  He is not however able to provide advice on Ethical investments.

Things that were not considered in that decision however are :

cogsmallIts impact on her benefit entitlement.
Local authorities must disregard your home for 6 months, when calculating your entitlement to care funding.
All other assets, such as an investment portfolio will be included, which in this case would negate her entitlement to any support.

cogsmallAll local authorities, under the new Care Act, must offer a deferred payment scheme.
Which means that you  are supported whilst you, or your attorney, find a buyer.  There is no such provision to give you time to sell a portfolio or access locked away capital.

cogsmallFuture security .
She is relatively young and therefore able to move from one rented property to another easily.
Will she have the same willingness to move when she is 10 years older?

It may be difficult for her to find a property to buy where she can be certain of wanting to stay for many years, needs minimum maintenance and is flexible enough to adapt to her needs but I believe its worth spending a few weeks or months trying.

Ultimately she will have more security.


Perhaps the above goes some way to explaining the difference between a financial adviser and a financial planner.

One is product focused and one is client focused.

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