London retiree weighs buy-or-rent decision as property market eyes SDLT uncertainty

A 76-year-old tax partner in a central London firm is weighing two paths as he nears retirement: buy a ground-floor flat that needs a substantial refurbishment for about £1.068 million or continue renting at roughly £5,000 to £6,000 a month while finalising his plans. His current home, a first-floor flat in a sought‑after conversion, is under offer for about £805,000. He would need around £500,000 to purchase and refurbish the new property, with stamp duty estimated at about £50,000 if the deal closes. He remains employed full time and expects to retire fully or partly within the next two years, with the possibility of spending extended periods abroad with his daughter and grandchildren. He has savings exceeding £700,000, which would cover the purchase and refurb, but selling and buying would leave him with a much larger tied-up amount and a longer commitment than he may want given the lifestyle changes on the horizon.

Savings and options frame the decision. If he sells his current flat but does not buy the new one, he would have roughly £1.5 million to invest on a risk-averse footing. Timing and certainty around retirement remain uncertain, complicating the calculus of whether to lock in a high upfront cost now or preserve liquidity for a period of transition. The alternative path—rentting while he tests life after full or partial retirement—offers flexibility but exposes him to ongoing monthly outlays that would be sizeable in the current environment.

Market context and tax policy chatter add to the decision matrix. The adviser commentary accompanies a broader property backdrop in which stamp duty and council tax reform have been the subject of speculation. Reports have linked governing-party policy discussions to potential changes that would replace stamp duty with an annual tax on high‑value homes, a shift expected to influence demand and pricing for prime properties. While the specifics remain fluid, the prospect of tax reform has cooled demand in parts of the market. Analysts from Knight Frank have forecast Prime Central London prices finishing the year around 4% lower than at the start of 2025, underscoring the market’s sensitivity to policy signals as well as interest-rate dynamics.

The reader’s decision sits at the intersection of personal finance, retirement timing and market direction. The adviser who spoke on the matter emphasised that the key question is whether the proposed ground-floor flat would serve as a long‑term home. The lack of stairs and the presence of outdoor space match common criteria for late-life living, suggesting the purchase could be sensible if the plan is to stay put for many years. However, appetite for a major renovation tends to wane with age, which raises a question about whether committing to a sizeable refurbishment now is prudent.

If the decision is to proceed with the renovation and relocation, the buyer would be advantaged by securing a stable base but would be committing substantial capital and time to a project that requires ongoing management, decisions and coordination with builders. Those considerations are amplified if the individual intends to travel or live part-time abroad, as the logistics of managing a large-scale refurbishment from afar can be demanding. In contrast, renting offers a stopgap that preserves capital and flexibility, while delaying a long-term binding choice about where to live and how much to spend.

On the financial planning side, the case highlights the tension between tying up cash in property versus keeping liquidity for other purposes. If the investor ultimately retires, his equity from the sale could form a sizeable nest egg, but the path to retirement remains uncertain. For those who are risk-averse, maintaining a robust cash buffer or placing funds in low-risk, tax-efficient instruments can make sense in the short to medium term.

To illuminate the liquidity question, financial planners pointed to several routes. One route is to hold cash across multiple savings accounts to remain within protection limits, complemented by investments in government bonds (gilts) for tax efficiency and potential yield advantages relative to cash savings. Gilts can offer post-tax yields that compare favorably with cash for higher-rate taxpayers, particularly when held to maturity. For instance, a gilt maturing in early 2028 with a small coupon can be purchased at a discount to its nominal value, creating a price appreciation alongside coupon income that, after tax, can produce competitive yields for savers with a short time horizon. The approach would depend on the time frame for funding a future home purchase and the level of liquidity the buyer is prepared to maintain.

The expert panel underscored that any decision should be anchored in the anticipated horizon for retirement and the intended living situation. If travel and time abroad are likely to persist, a longer‑term tenancy in a well‑located rent could preserve flexibility and capital for other goals. If, instead, the buyer perceives the ground-floor flat and its refurbishment as a durable home for the medium to long term, a purchase could be rational, provided the financial commitment is aligned with retirement plans and tax considerations.

The discussion also touched on broader mortgage dynamics. When contemplating a move in the current climate, buyers are advised to explore financing options early and to work with a broker to evaluate rates and terms, as rates and lending criteria can shift with policy changes and market sentiment. Those who choose not to proceed with a purchase should still consider how best to structure savings and investments to weather potential market volatility, while maintaining the liquidity needed for future housing decisions and life events.

In sum, the decision before the reader is highly personal yet strongly guided by market conditions and policy signals. The prudent path, given the uncertainties around retirement timing, stamp duty reform and the costs of a major renovation, could be to test life as a renter while maintaining substantial liquidity. That approach would preserve flexibility, allow the reader to observe how his plans evolve, and keep options open for a future decision on housing in London or elsewhere. In a market where prices and policy are in flux, a staged path that balances living arrangements with liquidity and risk considerations may offer the best route to a stable retirement trajectory.