Downsizing is a natural step in the cycle of homeownership. At some point, the house you’ve called home for several years (maybe even decades) will no longer be the most practical, and when the time comes, you’ll make the transition to something smaller and more manageable.
While there are a lot of important decisions that come with downsizing, one that is often unconsidered is whether or not it is better to buy or rent your next place. Many downsizers assume that buying is the way to go. However, renting as a retiree absolutely has its merits.
In this blog, we’ll touch on the advantages of switching to renting as a downsizer to help you decide if it’s the right path for you.
Cut Your Costs
Renting has a lot of appealing aspects to it. However, one of the primary reasons why people choose to rent in retirement is the lower costs. When you buy another home, you’re not just paying for the property itself. You’ll also be on the hook for transactional costs like land transfer taxes and legal fees, plus recurring costs like annual property taxes. These costs can add up in a hurry. Alternatively, renting doesn’t come with many costs beyond what you pay in rent.
Want to sell your home and downsize? Check out these related blogs for more helpful insights!
- Top 5 Toronto Neighbourhoods For Empty Nesters
- How to Purge the Family Home
- Is There Such Thing as a Stress-Free Downsize?
Lifestyle Related Costs
On top of the hard costs of homeownership, you could face additional expenses depending on how you choose to spend your retirement. For instance, if you’re looking to do some travelling or want to spend the winter months somewhere warm, you’ll want to think about Toronto’s Vacant Home Tax (VHT).
If you’ll be in your own home for less than 6 months out of the year, there’s a good chance the VHT applies to you. This means you’ll be on the hook for paying 1% of your home’s value (on top of all other taxes) every year.
Unlock More Freedom
The advantages of renting as a rightsizer aren’t just monetary. On top of having fewer financial responsibilities, renting usually means having less to worry about on the property upkeep side of things.
One of the biggest reasons people choose to downsize is for the convenience it provides. With that in mind, a significant advantage of renting is that it cuts out many of the responsibilities of homeownership. For instance, when you rent, you’re not burdened with property maintenance, repairs, or the stresses of property ownership. Instead, you get more time to spend on things you enjoy. This also makes it easier for you to pack up and go if you’re a frequent traveller.
Thinking about downsizing to a rental? Explore these blogs for more helpful advice.
- What to Expect From Rightsizing
- Why You Should Consider Downsizing in Downtown Toronto
- Not Ready For Condo Life? 3 Alternatives For Downsizers
Choosing the Right Property Matters
Renting comes with its fair share of perks, but it’s not totally risk-averse. Toronto’s rental market can be volatile which means that choosing the right type of rental is just as important as choosing the right type of home.
When you own your own home, you can stay put for as long as you like. However, when you’re renting a property that’s owned by someone else, you don’t always get a say. For instance, if your landlord chooses to sell the property while you live there, you could be required to leave on only a few months’ notice. Renovation-related evictions are also somewhat common in Toronto and they can be difficult to appeal.
So, all that said, tapping into Toronto’s dynamic purpose-built rental market can be a smart way to find your next home. Unlike independent rentals which are usually owned by small-scale investors who manage a portfolio of one to a few dedicated income properties, a purpose-built rental property offers a much more secure and predictable living situation.
As an experienced and collaborative real estate team, we can help you navigate the process of rightsizing. When you’re ready to begin your next chapter, get in touch. Click here to send us an email or call 416-587-3300.
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