Buy or rent? Windfall from £450,000 home sale prompts retirement planning rethink

A couple in their fifties, mortgage-free and with grown children who have moved out, are weighing whether to buy a new home for £450,000 or rent and invest the windfall after agreeing a sale on their family house. They had planned to buy again with the proceeds, but a slow selling experience has prompted them to reconsider and to think through how best to use the money for retirement planning while supporting their children.

With a similar property currently available to rent around £1,000 a month in their area, they calculate that renting at that level would take about 37.5 years for the total outlay to equal the sale proceeds. However, the math is complicated by rent inflation and the potential for investment returns to outpace property appreciation. The couple notes that house prices in many parts of the country have scarcely moved in the past decade, while the value of their pension and ISA investments has risen substantially.

Buyers typically face upfront costs beyond the price tag, including stamp duty, legal fees and surveys. For a £450,000 purchase, a common estimate cited by advisers is a stamp duty bill around £12,500 — a sum that can exceed a whole year’s rent in some markets. There is also evidence that a significant portion of property transactions fail to complete, a factor that can complicate moves and weigh on market activity. Santander data cited in the debate show about a quarter of buyers experience a chain failure, which can stall plans and create uncertainty for households considering a move.

Against that backdrop, there is a recognized financial case for renting, at least in the short term, if the windfall is put to productive use elsewhere. Rob Dix, co-founder of property-advice site Property Hub, says the decision can come down to the expected return on the £450,000. If a rental is the chosen path, he notes that a return of about 2.7% on the invested amount could cover the annual rent costs, assuming rents do not rise. He adds that renting preserves flexibility to move geographically or to adjust housing needs later in life, which can be valuable if circumstances change.

Alice Haine, a personal finance analyst at Bestinvest, warns that the apparent advantage of renting hinges on rent inflation. She cites Office for National Statistics data showing private rents rising recently, with the national average up about 5.9% to around £1,343 per month in the year to July 2025, and regional variations widening. In the north of England, annual rent inflation reached about 8.9% over the same period. She argues that such increases could erode the savings from not tying money up in a property over time. Renters also face less security, since a landlord can seek to terminate tenancies with relatively short notice, and the upcoming Renters’ Rights Bill could bring greater protections from 2026.

Faye Church, senior financial planning director at Rathbones, notes that renting’s flexibility can be attractive for people who want to use wealth to fund other goals, such as gifting to children or grandchildren. She also cautions that, for those who still value asset protection and potential inheritance, tying wealth to a home may offer advantages at later life stages, including possible estate planning considerations. When discussing the broader choice, she stresses that the right approach depends on individual risk tolerance, location, and long-term goals rather than a purely numerical comparison.

If the couple chooses to rent for a period, many advisers suggest a blended approach: buy the next property with a modest mortgage and use some of the sale proceeds to invest for growth, tax efficiency and liquidity. A balanced portfolio that includes gilts or other fixed-income vehicles can provide a passive income that helps offset potential rent increases and preserve capital for later life care or other needs. Maximizing pension contributions and leveraging tax relief can also compete effectively with property-driven wealth-building, depending on the couple’s earnings profile and tax situation.

For those hoping to pass wealth to children, property wealth has traditionally been a cornerstone of intergenerational planning. Without a property asset, families may rely more on pensions, ISAs and other investments, but some fear this may limit options for funding early life goals or later-life care. Equity release can be considered in certain circumstances, though it carries costs and can affect an estate’s value at death, so careful planning is essential.

Ultimately, experts emphasize that the decision hinges more on psychological and lifestyle preferences than a purely financial calculation. Renting can be a perfectly valid long-term choice for people who value flexibility and cash liquidity, while buying may still be the better route for those who want fixed housing costs and potential inheritance benefits. The key, advisers say, is to tailor the plan to the couple’s financial needs, risk tolerance, and retirement goals, and to seek guidance from a financial planner and an investment manager to structure an approach that aligns with their circumstances.

As households reassess housing choices in a market where price movements have been modest in many areas, and where mortgage costs can change the affordability equation, the decision to buy or rent remains a personal one with wide-ranging implications for retirement planning, wealth transfer, and lifestyle expectations.