To not understand downsizing as a means to release cash?

[Shinynose]

I live in a 4 bed detached house and now DC are adults it's too big and requires too much maintenance, so that's a good reason to downsize.

However, people often talk of downsizing as a way to fund their retirement or help DC with house purchases of their own. I can't make the maths work.

My house is worth about £500k, a not insignificant sum. It's in The South East but in a cheaper part, in the slightly nicer part of a not that nice town.

This "nice" bit doesn't really have smaller houses, for something smaller it would have to be a bungalow, which would cost about the same, possibly more than my current house.

I could move back to where my first house was, a 3 bed terraced ex council house, but that would cost £350k and after costs would raise maybe £100k (?), a lot of money but not a lot to live on for very long, and a significant reduction in quality of life.

Is this kind of downsizing only for people who live in very expensive areas and who are prepared to move a long way from home? Or am I missing something?

I agree, I’m in a 4 bed detached but I couldn’t afford a 2 bed bungalow where I am. I’m better staying put and making a bedroom/bathroom downstairs here.

What do one or two beds cost further afield?

The idea is that once you are retired, you don't need to live near your job (usually a city) and can go out to a cheaper area for a smaller property.

It does release cash but nowhere does it say the cash released will be enough to retire on.

Of course if your property is worth 2m, then you have more options and cash to play with. How long is a piece of string?

The maths will work, you just have to adjust your expectations and work within budget constraints.

we plan to downsize. Our house is worth roughly what yours is. Say we need about 200k to make the move worth it.

so we find a property 300k or less. Be that moving area, a flat, a two bed terrace.

of course it won’t work if you want to sell and buy somewhere of a similar value, or so expensive it doesn’t leave you enough money freed up.

why does it have to be a 3 bed house or a bungalow? Why not a 2 bed flat?

It really depends on the area, the propert being downsized from and the mix of other available property. Where I live (south west), if you owned a 4 bedroom house worth £700k you could downsize to a 2 bedroom for about £350k within half a mile. That would be a significant difference. Elsewhere, there may be less choice and generally higher prices

I think downsizing isn’t realistic in many situations. Esp if you still want space for adult DC (and DGC?) to stay. Some family friends have been ‘trying’ to downsize for years but nothing fits the bill, except their existing house!

I don't need to live near my job, but I need to live near my "life"

I think when people talk about downsizing it's more big house in expensive place to small house/flat/apartment/supported living in a different area. It could even mean renting as a preference.

That would leave a really large amount of funds to invest for an income.

In the bit of the south east in am in there are lots of multi million pound houses, and little cottages at a third of the price or less. It’s probably one of the few areas where downsizing might make financial sense, but otherwise the costs involved are prohibitive. But most people used to big houses with lots of space and big gardens won’t, I imagine, want a tiny two up, two down, with no space for guests and no real garden, which is what the cottages are like (I live in one of them!)

Yes, it’s an idea for rich people.

I met a retired couple sizing from their 2.5mil detached to a 1.5mil smaller detached.

The idea is you downsize by a smaller house somewhere much cheaper, not downsize and stay in the same area, which is unlikely to release much b6 way of equity

the other point of downsizing is to make monthly bills cheaper

Most areas have a mixture of types of housing, I guess if that’s not true of precisely where you want to live it won’t work but I l’d think it’s quite unusual for there not to be different housing options in most areas.

Surely it just depends on the area. My dad has a very large 5 bed detached house, he has just retired and they're planning on putting it on the market. Expecting around £450k. He could get a lovely 2 or 3 bed detached here for £230-280k in the same village.

Since you don't want to move too far outside your area and only going down one bedroom in size from a property that isn't worth a fortune and there isn't a lot of choice of housing stock around your area, you are stuck.

Dems the Breaks.

At the risk of stating the obvious, this is specific to your circumstances. You will have to find a compromise to be able to release more cash. Time to do more research.

I think the prices in your area and type of housing are the issue. I live in commuter town for Bristol. It's a desirable place to live and has a wide range of housing. If we took my pil as an example and today's house prices, when I first married my wife their 4 bed house would be £750k, they moved a small 3 bed, £450k, now in a retirement complex £175k. If they had gone straight from the 4 bed to the retirement it would have given them
£575k to live on

It completely depends on property prices, availability, location and how much is invested in the primary property.

My MIL downsized from a 4 bed rural house (£350k) to a 2 bed bungalow in town more suited for her needs (£360k) so she didn't release any money.

Her sister downsized from a roomy 3 bed detached house in a lovely area with good schools (£785k) to a 2 bed terrace in a nice area but no schools (£295k) so she had lots!

Yes you’re right, downsizing is only worthwhile if the house you are selling is significantly worth more than the one you intend to buy. In your case, the maths don’t work. The cost and hassle of selling and then buying somewhere else seem pointless.

Near me there are houses for sale for over £500k and round the corner a couple of minutes walk a house and a bungalow both for well under £300k. Theoretically a downsize would release a sizable chunk

I can understand it’s difficult if the housing stock is that limited in your area.

I sold a large 4 bed and downsized to a little one bed cottage. Released about £300k equity.

When we downsize the house will be smaller but more expensive as the location we want costs significantly more than where we are now, so yes downsizing of the house but no equity released. I think there are lot of people in the position of owning a detached family home who realise that downsizing to say a bungalow costs the same or more as the property they already own, once you factor in moving costs and any remodelling or redecoration it becomes financially unviable and many find it’s cheaper to stay in their home and spend the money on converting a room to a downstairs bedroom and paying for a cleaner and someone to keep the garden tidy, no moving stress either.

It's a real problem.
My house is getting too big, but a smaller more manageable one would cost almost the same amount ( in the same town) because smaller properties are more sought-after. I know this is very different from London!
Our current house is in a perfect location close to shops, surgery and public transport, whereas smaller homes are up a steep hill going out of the town. We've done a lot of work on this house over the years and used up a lot of money doing so, so now it is comfortable and well maintained and decorated to our taste, whereas a new home would almost certainly need work doing.
So, moving locally to a small house or bungalow doesn't add up for us. It would cost a shedload of money without releasing any, and we would become less independent, rather than more, and most likely need a car which we are planning to give up soon.
I don't know what the solution is. Moving to a different area feels like a huge thing at our ages.

I know several people who bought downsize homes which were half the price of the sold home: combination of smaller home and cheaper area.

You don’t have to if you choose not to but it absolutely is a viable way of supplementing your pension.

Smaller places are also (mostly) cheaper to run as they're smaller and have lower council tax. Obviously doesn't work if you're going from a super well insulated house to a less insulated one with oil heating!

I'm on Merseyside. They've built apartments for 55+/medical needs. They are two beds so go for £160k. The two bed houses surrounding them are only worth £120k fully done to modern standards. It's a bit of a mystery who they were designed for, but not why they all still stand empty.

I suppose if it makes no financial sense to downsize, then one option is to renovate and take in lodgers for the spare room(s).

If