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76zedfour

Take The Money And Run - But To Where In Britain?

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I have some friends whose kids have flown the nest and are considering a change in pace of life. They have a fairly decent amount of equity in their house in the South East circa £500k and are in the early stages of considering selling up, and looking to buy a house outright for £250k, leaving the other half to be invested to provide an income drawdown for 20 years until they are pensioners and some modest work pensions kick in. They have mentioned Lincolnshire as a possible destination for no other reason than they can see how far their money stretches there.

It got me wondering how many HPC'ers have taken the money and ran or are considering doing it and what area of Britain could provide the best balance of climate, access to healthcare, shopping and entertainment, possible p/t work, scenery etc.

Can £250k provide you with £250 a week drawdown index linked for 20 years? With no mortgage and I suppose some chicks and veg patch etc is this enough to live modestly or will p/t work be necessary?

Any thoughts, comments, experiences to share welcome......

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It got me wondering how many HPC'ers have taken the money and ran or are considering doing it and what area of Britain could provide the best balance of climate, access to healthcare, shopping and entertainment, possible p/t work, scenery etc.

Can £250k provide you with £250 a week drawdown index linked for 20 years? With no mortgage and I suppose some chicks and veg patch etc is this enough to live modestly or will p/t work be necessary?

Any thoughts, comments, experiences to share welcome......

Some sold to rent before the blip-hpc of 2007/08 (banking a lot of hpi profit), although from 2010, followed by years of extreme house price reflation in many half-desirable areas to 30% former peaks.

I can't make suggestions about drawdown, but can tell you with no doubt whatsoever, a quarter of a million pounds is a lot of money. Not many people have access to that in liquidity. I've just been arguing the case, that very few owners look at cashing in for they have the belief house prices will continue to go up and up, despite crazy prices, and very few get out of market at 90% of peak value - it sounds like a smart decision to me, if you believe house prices are set to fall.

No suggestion to make about area; it has to be where an individual is happy with.

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If they were reliant on London for shopping/entertainment - nowhere else in the UK will come close. They might consider some of the less fashionable parts of the south coast with good links to London. I know people who highly recommend Worthing for example.

Personally, with a decent internet connection the requirement for shopping/entertainment you travel to has virtually vanished. I do enjoy walks/cycling etc in the hills/beach/woods and have those within seconds or minutes of my doorstep.

I would be looking to the future and thinking small house that requires little work, and is well insulated/economical to run. Couple that with the probably impossible dream of a large garden or more likely an allotment. Plus good bus/rail routes. Perhaps even a south facing roof so you can fit solar PV (still a good earner that'll probably provide enough savings each year to pay for a few days holiday each year after it's paid off - my non ideal configuration looks set to bring in £600+/year index linked tax free income/bill savings for the next 20 years). In short manage the bills down, and you could live comfortably on a bit less than £250/week.

Also need to bear in mind, that the rural idyll can be anything but. It could take time to make friends/be accepted or it might just feel too isolating.

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Have they stopped for one minute to wonder where this unearned tax free money has come from and who they will be asking to pay for it and will someone be able to pay it.

Give us an update when they have sold and banked the "equity" and had been gifted a free house by the free market house tories.

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Come to Scotland!

You can buy a pretty nice detached house in my village (Kincardine) for less than £200,000:

http://www.rightmove.co.uk/new-homes-for-sale/property-32232079.html?premiumA=true

You could probably get it cheaper as it has been on for a while. There are loads of great walks in the area if that is your cup of tea. Glasgow and Edinburgh are less than an hour away. Dunfermline, Stirling and Falkirk are all about half an hour away. The village is getting fibre broadband.

You could live like a king up here with that kind of money. England is so overpriced in comparison.

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Southern Ireland? New Zealand? Newfoundland?

I just think when the SHTF they won't be as badly affected.

I have often thought about where our elite are planning on living.

I still don't know.

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Have they stopped for one minute to wonder where this unearned tax free money has come from and who they will be asking to pay for it and will someone be able to pay it.

Give us an update when they have sold and banked the "equity" and had been gifted a free house by the free market house tories.

At £500K it's likely to be either a banker or BTL. I have zero sympathy for either.

I resisted suggesting North Wales, lovelyhead, on the grounds of climate. I do think it's one of the UK's forgotten gems (places like Rhyl aside) - but blimey it does rain a lot here. I live in the middle of nowhere - and the village got fibre broadband a couple of months ago.

Edited by StainlessSteelCat

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Come to Scotland!

You can buy a pretty nice detached house in my village (Kincardine) for less than £200,000:

http://www.rightmove.co.uk/new-homes-for-sale/property-32232079.html?premiumA=true

You could probably get it cheaper as it has been on for a while. There are loads of great walks in the area if that is your cup of tea. Glasgow and Edinburgh are less than an hour away. Dunfermline, Stirling and Falkirk are all about half an hour away. The village is getting fibre broadband.

You could live like a king up here with that kind of money. England is so overpriced in comparison.

I had a look to see what it last sold for but couldn't spot it. I thought this one seemed a lot of house for the money

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=36114091&sale=21057794&country=scotland

How cruel is that though? £239,995 in 2013 and £240,000 in 2008. They could have paid £5 more to save the vendors some psychological scarring!

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I had to laugh at some of the critical replies regarding their equity to the point where I spoke to them today to mention I had posted their situation on a forum and it was attracting interesting replies. Here are some salient facts which they are happy for me to disclose as they are as interested as I now am to see if their plan has merit; They live in central Hertfordshire in a commuter town in a substantially extended end terrace ex local authority house worth £500k and have no mortgage. For anyone outside the South East £500k doesn't buy you a mansion but a fairly modest house in a decent commuter town. They bought it 30 years ago from a private seller and are neither speculators nor bankers. He is semi skilled earning average wage. She is part time low paid. They are the fit and active type. He has always paid into a work pension.

They are looking for semi rural or edge of town away from city life. I think climate may rank fairly high on their requirements so in my opinion Scotland or NW Wales may be too wet or cold possibly although I have to say that Scottish house looked fabulous value to me at least.

I have never thought of them as wealthy or different than anybody else but I do admire their foresight to realise their equity (obviously enhanced by the South East Bubble) could provide them a better or semi retirement lifestyle in another art of Britain.

As another poster mentioned £250k is a huge amount of money when it is in cash and not equity. Any other thoughts on how long this can be made to last and how?

@mod Did I post this in the wrong forum as on reflection its not really apart SE house prices?

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I think the misconception of your friends being bankers as they have a 500K property is indicative of how the past two decades of HPI is going to scupper a generation.

Your friends have lived modestly and paid off their mortgages with pretty standard jobs. However, they now can downsize and have a very sizable pension pot because of HPI. In a normal economy this would not be possible, and as Count mentioned, who is paying for this pension pot? It is the younger generation - either directly (if the were FTB - unlikely!) or indirectly from whoever the FTB is at the start of the chain.

We cannot be angry at the people who are doing this - it makes good financial sense and many of us would do the same in a similar position - just at the system that has allowed this to happen.

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I think there's a misconception of what I previously posted here. I was suggesting that the only people ponying up £500K for the OP's friends house are likely to be bankers or BTL. I wasn't implying they were either.

For advice on how to live on the cash, I suggest they might start with a few blogs like Early Retirement Extreme.

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Regarding your reference to a normal economy Elad I suspect that if living in the South East and substantially extending a home over a lifetime it would provide a larger pot relative to other parts of the country regardless. However HPI may make the scale of this difference at this particular moment favourable.

@sscat, I did assume you inferred my mate was a banker and can now see what you meant. Will pass the blog onto him.

My situation is slightly different to that of my friends but its prompted me to take a look at rightmove and what can be had around coastal areas for £200k. A lot of the areas I am familiar with are fairly expensive but there does seem to be some bargains relative to the South East it would seem if you look further afield.

I might start another thread asking what does £200k get you around Britain for my own situation :P

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Regarding your reference to a normal economy Elad I suspect that if living in the South East and substantially extending a home over a lifetime it would provide a larger pot relative to other parts of the country regardless. However HPI may make the scale of this difference at this particular moment favourable.

@sscat, I did assume you inferred my mate was a banker and can now see what you meant. Will pass the blog onto him.

My situation is slightly different to that of my friends but its prompted me to take a look at rightmove and what can be had around coastal areas for £200k. A lot of the areas I am familiar with are fairly expensive but there does seem to be some bargains relative to the South East it would seem if you look further afield.

I might start another thread asking what does £200k get you around Britain for my own situation :P

Tell them to look round Deal went there as a kid just won high st of the year about to be 'found ' in IMHO lots of stock if you include Walmer

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Come to Scotland!

You can buy a pretty nice detached house in my village (Kincardine) for less than £200,000:

http://www.rightmove.co.uk/new-homes-for-sale/property-32232079.html?premiumA=true

You could probably get it cheaper as it has been on for a while. There are loads of great walks in the area if that is your cup of tea. Glasgow and Edinburgh are less than an hour away. Dunfermline, Stirling and Falkirk are all about half an hour away. The village is getting fibre broadband.

You could live like a king up here with that kind of money. England is so overpriced in comparison.

But, but, it's in Fife.......ffs

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I have never thought of them as wealthy or different than anybody else but I do admire their foresight to realise their equity (obviously enhanced by the South East Bubble) could provide them a better or semi retirement lifestyle in another art of Britain.

As another poster mentioned £250k is a huge amount of money when it is in cash and not equity. Any other thoughts on how long this can be made to last and how?

I think 250k is a remarkably small amount of money between 2 people over 20 years. Using a the general rule of inflation being 2% over the rate of interest (real inflation on essentials not the government figures) then 250k earning regular interest (nothing risky) would last exactly 20 years (250pw) rising with inflation yearly. When I look at my own retirement plans, with no mortgage at that point, my basic figure (gas, elec, council tax, water, 1 car, phone, internet, insurances, money aside for home maintenance) is 600pm. On their sums that leaves £483pm between 2 people for food and everything else. If they're frugal and don't need a new car, holidays or anything fancy it's do-able on a basic level (I'm sure the Skinflinteratti will be along to say I'm being flambouyant!) As you say semi-retirement then it's fair to say they will have to work at least part-time, so they need to look at areas with some sort of work available.

I do salute anyone that decides to get out of the rat race and make a simpler life for themselves.

Edited by Starla

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I think 250k is a remarkably small amount of money between 2 people over 20 years. Using a the general rule of inflation being 2% over the rate of interest (real inflation on essentials not the government figures) then 250k earning regular interest (nothing risky) would last exactly 20 years (250pw) rising with inflation yearly. When I look at my own retirement plans, with no mortgage at that point, my basic figure (gas, elec, council tax, water, 1 car, phone, internet, insurances, money aside for home maintenance) is 600pm. On their sums that leaves £483pm between 2 people for food and everything else. If they're frugal and don't need a new car, holidays or anything fancy it's do-able on a basic level (I'm sure the Skinflinteratti will be along to say I'm being flambouyant!) As you say semi-retirement then it's fair to say they will have to work at least part-time, so they need to look at areas with some sort of work available.

I do salute anyone that decides to get out of the rat race and make a simpler life for themselves.

Using your 2% inflation above income (tax fee) I don't even see £250k lasting 20 years with a £13k drawdown. Say 2% income and a 4% inflation adjusted £13k drawdown, I make it 17 years unless there a bug in my spreadsheet and you can get me an extra 3 years. Year 18 needs £24,348.76 drawdown with only £18k left in the pot.

Re your £600 pm, what year does that relate to from now or is it now?

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They are both about 50 so I guess will need 17 years drawdown until state and his modest workplace pensions kick in so it seems its doable.

Just had a quick text from him saying they have spent this weekend on the Isle of Wight looking at property and seem to think they can buy the sort of house they crave for the £250k mark there. I just browsed rightmove and it does appear you can get a detached 3bed within a few minutes of the coast for this money.

I would imagine climate wise the area is hard to beat but isn't the ferry trip quite expensive from what I recall? Would you need to come back to mainland regularly? Has it got a hospital etc?

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Using your 2% inflation above income (tax fee) I don't even see £250k lasting 20 years with a £13k drawdown. Say 2% income and a 4% inflation adjusted £13k drawdown, I make it 17 years unless there a bug in my spreadsheet and you can get me an extra 3 years. Year 18 needs £24,348.76 drawdown with only £18k left in the pot.

Re your £600 pm, what year does that relate to from now or is it now?

Fixed for me. I'd put my inflation and IR's percentages in the wrong columns. No bugs.

My £600pm is based on now, so that would be adjusted for inflation each year too.

76zedfour - Apols for buying your friends 3 extra years briefly, but on these sums I'd be looking at what I needed housing wise, not what I wanted and 250k on a 3 bed detached, for 2 people living off the equivalent of one minimum wage salary, seems excessive. Council tax, water, heating, everything is going to be a lot more expensive than they'd need it to be. Less house, less to pay for.

Edited by Starla

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That looks like a house with great potential and google maps does appear to show a nice area close to the sea. Apparently its also very close to the bungalow covered in yoghurt that was on Grand Designs years ago. I remember it as I am a bit of a Grand Designs fan.

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Torquay is hard to beat value-wise. Large parts of it are down at heel, but by no means all. The climate is good, you can get a direct train to London, there is a loads of beautiful regency architecture, nice beaches, a nice main street and harbour etc.

Property is comparatively cheap compared to the rest of Devon, let alone the South East. eg Five bed house, 10 mins walk from station, 10 mins walk from harbour, would look beautiful with a lick of paint £150,000

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