Hooked on the dream of country life

Fishing around for a more relaxed way of living? Then catch up on your finances
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Quitting the rat race of urban stress and heading for a new life in the countryside is becoming increasingly popular. Research by the Royal Institute of Chartered Surveyors shows nearly two-thirds of farms sold between April and June were bought by non-farmers. Rob Jeffrey, founder of NewLandOwners, says: "For them, it's living the dream, but in many ways they are the saviours of the countryside."

One man who realised his dream is William Daniel, who left his job as a City stockbroker in 1995 to establish his own business and has never looked back. "I was fed up with working in the City" he says. "I didn't enjoy it and it seemed a dream to spend my days in the countryside. That dream proved to be one of the best decisions of my life."

The former Cazenove employee used his passion for fishing and his desire to escape the City rat race and form Famous Fishing, taking individuals and groups fly-fishing in the world's finest trout streams, including stretches of the Test, Itchen, Kennet, Avon and most of their tributaries in southern England. The trips can be combined with hospitality and accommodation, pulling guests from all over the world, particularly the United States.

As a broker from Wands-worth, south London, Mr Daniel used to treat clients to fishing trips, until a guest suggested he should do it full-time. A major corporate client is now his former employer, Cazenove.

Mr Daniel lives in the picturesque town of Teffont Evias, near Salisbury in Wiltshire, with his wife, Cherida, and four children, aged between 11 months and 14. Cherida, a former architect, runs a nursery school. "Life couldn't be better," Mr Daniel says.

He had the courage of his convictions. But making a radical change means your lifestyle, and in particular your finances, will have to be overhauled. If you have been employed, it is likely your employer has been handling many of your pension and life assurance needs for you. After you leave that job, you will need to take these matters into your own hands and the inevitable complications mean you should seek professional help from an independent financial adviser.

Paul Ilott, an adviser at Bates Investment Services in Horsforth, near Leeds in West Yorkshire, said the type of scheme your former employer operates will influence what happens to your pension.

With a final-salary scheme, one option is to arrange a deferred benefit at the scheme's normal retirement age, but you will not be able to continue contributing to the same scheme and will need to shop around for a new pension.

You could also arrange a transfer value and establish your own pension. But if you were in a personal or stakeholder pension, that pot is transferable so you can take it with you and continue contributions. City exiles may also have to take responsibility for health insurance, life insurance and income protection insurance. Rates and terms vary considerably, so shop around for the best deal.

Premiums of income protection insurance might rise sharply if you change occupation. Those moving from an office-based professional slot to a manual farm job are considered to be at higher risk of having an accident, so can almost certainly expect an increase. If you intend starting a business, such as running a farm, setting up a shop or providing a service, there are important decisions.

You may wish to establish a company, a partnership or register with the Inland Revenue as a self-employed sole trader. If hiring staff, you will have to pay their national insurance contributions as well as your own. A visit to an accountant is a must.

Mr Ilott says starting a business usually requires capital investment. "People should be wary of putting all their eggs in the one basket, because a return from their capital and their income is dependent on the success of that business." Be prepared to budget. After leaving steady employment you will be used to a regular salary, but income from an early-stage company or self-employment is much more likely to fluctuate. So do not over-commit yourself.

Most people who sell their city home, especially if it is in London, to move to the country can expect to make a tidy profit. Nationwide research shows the price of a typical house in Reading, at just under £190,000, is nearly £150,000 cheaper than a similar property in west London, although it is only a 41-mile drive along the M4.

But Mike Owen, a financial adviser at Plan Invest Group in Macclesfield, Cheshire, says not everyone will be fortunate enough to have excess funds after buying a house and may have to continue making mortgage payments. He points out that with such low interest rates, there are big savings to be made on renegotiating your mortgage at this point.

Mark Dampier, a financial adviser at the Bristol-based Hargreaves Lansdown, says if there are surplus funds from selling the home, city exiles should not tie this up immediately in investments. They should shop around to find the best offers from banks and building society accounts.

"With such low interest rates, the prospect of leaving money in the bank is not that attractive," he says. "But these people should remember they are making a big lifestyle change and there could be big surprises in store. Ensure there is ample rainy-day cash and remember that any investment in the stock market should be for the longer term."

Whether your transport costs rise or fall when you move to the country will depend on the distance you travelled in the city, and your planned mode of transport in the countryside. Because public transport is less efficient in rural areas, many non-car owners in cities will need to buy a vehicle.

This will be an added expense if you did not have motor transport in central London. If this is a new expense your pockets are likely to notice the difference, unless you spent a lot on commuting while at your urban job.

But running a car in the country is considered cheaper than in London, mainly because insurance costs are less. AA Personal Finance says the average cost for a 37-year-old male and his partner to insure a new standard 1.6-litre car in London SW4 is £469 per year. The same couple would pay £294 per year for insurance in Wiltshire and £291 a year in the Lake District.

Even with the AA's assumption that the average country person will drive 10,000 miles, compared to 5,000 in the city, costs are still less. The average monthly cost of a car, including insurance, in London SW4 is £348, £333 in the Lake District and £334 in Wiltshire.


* Ask your present employer about your pension. If you are in a final-salary scheme, go for deferred benefit. If it is defined contribution, take your money and start a personal pension.

* Shop around for health, life and income protection insurance. All may be affected by your change to a country address.

* If starting your rural business, talk to an accountant about transitional tax arrangements, Vat registration, capital allowances, grants and national insurance contributions for you and any staff.

* Draw up a budget, making conservative assumptions about how low your outgoings and how high your income will be.

* You may not need a commuter's season ticket, but that may be replaced by the capital outlay of one or more cars, depending on your partner's career and if you have children.

* Shop around for the best phone and other utilities deals. Check www.uswitch.com.

* Cut borrowings down or out until you are confident about your new financial position. You should make a profit on swapping a city home for a country one, which may enable you to do without a mortgage.

* Beware of tying up any surplus cash too quickly in long-term investments. You need the equivalent of at least six months' expected income in the bank to cope with emergencies. After two years you may be able to cut this ratio to three months.

* Do not cut yourself off entirely from your former life. Frequent exchange visits between you and your old friends will make it easier to deal with the emotional upheaval while you establish new roots.

* Don't forget to enjoy it.

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