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?

Why would anyone move from a 4 bed detached to a flat?!

We live in a low cost part of the country. Downsizing from a 4 bed house to a 2 bed flat would free up around £150-£200k, which is a lot of money which could be used for a flat for our son, or we could live on for a good few years. The bills would also reduce significantly

My IL's used to say this.

They'd contemplate downsizing, but everything they looked at didn't have a living room big enough to accommodate visiting family, or didn't have a separate dining room.

Basically they wanted the same house downstairs as they already had, but with only 2 or 3 bedrooms upstairs instead of 4, and thought that this would be easy to find and would release a few hundred K in cash.

Needless to say, they never moved!

I think downsizing only really works if you're relocating to a much cheaper area or have a massive house that you're swapping for a 1/2 bedroomed flat.

We did try to move MIL from £200k flat to one nearer to BIL for £50k. But my SIL blocked it (don’t blame her) and MIL just wouldn’t do it.
She was in a cold, damp Victorian flat and would move to a modern one with more bedrooms. She would have been much happier. She didn’t have a community where she lived anyway.

I think there’s a period you can move someone and once it’s past it won’t happen. My friends parents moved from a huge detached property to a flat they did up first, staying in a rental temporarily. Friends dad died during this and his mum said if she wasn’t already moving she wouldn’t have done it, although she’s much happier where she is.

Where we are there are some luxurious flats with lovely gardens and plenty of older people but them to downsize. It’s perfectly normal but they are more money than a 4 bed estate house in the bigger town nearby. However, to be honest, the flats are classier and near the shops and everything anyone older would need.

2 bed Bungalows are similar in price to a 4 bed estate house here. Virtually no new ones because they take up the same land as a house and are therefore disproportionately more expensive. However moving to a less desirable area produces a saving. Definitely the further you go from a station, the cheaper it is.

I agree there comes a point where if you don't move, you won't unless you are forced to. The logistics become too difficult.

My Mum is in a similar position, it’s the upkeep of the house that is the problem as it’s too large for her. She has now made adjustments so that she lives in the ground floor, her bedroom etc is all on that level and that leaves the upper floor for air b&b/foreign students.
The money she gets from those enables her to maintain the house and she enjoys the company of the students but equally has the whole house to herself if she wishes by not taking anyone over the winter months.
Ive mentioned about downsizing into something cosier, easier to heat etc however she adores her house and would probably only release a minimal amount by downsizing as her current house is a lovely house but not in the best area. What she has done seems to give her options and she is happy to continue this way until she needs an element of care, which is when she has said she will rethink

It can also be a matter of not downsizing but in my case 'down-pricing' to release cash.

I'm practically retired and live in a 2-bed flat in inner London - I can't get much smaller in size but could buy somewhere cheaper. But where?

I'm a city girl and do city girl activities so not interested in moving out to the sticks or suburbs - could do with some more cash but don't want to compromise on lifestyle so expect will stay put!

I've read articles about this, but I am aware of two of these villages by us where there is a waiting list to get in. So I'm assuming there must be quite a variety around the country and potentially from the different companies that run them. I am aware of a few families who have had no problem at all selling them once their parents died.

@WiddlinDiddlin my parents are the same. They probably should have moved 10 years ago but now it would be difficult. They are in their 80s and are having to employ a gardener and I expect a cleaner in the next year or two. Since my db died last year I'm their only dc and my 4dc are spreading their wings so there is no need for them to stay in the area though they are quite well known in our small town. Dm would like to move back up north to where they are from originally but df is not so keen. It's difficult but for them moving would be more about making the property easier to manage rather than releasing money.

The difference between the two is the Over 60s pass in London can't be used in other cities, whereas the Freedom Pass (at State Pension age) can be.

I am retired but I don't want to live in a different area all my friends are here and so are my children.Most of my friends feel the same .
We have been looking to downsize for a few years but we can't find a suitable property in an area we want to live in for a suitable price. A nice bungalow costs more than our 4 bedroomed semi! So rather than making on downsizing we would have to spend money to do it.

I don't think that is true at all.

Of course it affects the relationship if you used to live a couple of streets away from your friends, and would see them a couple of times a week at things you attend, and give each other lifts to places, and help out by feeding the cat when you are away etc, if one of you then moves 5 hours away. It completely changes the relationship.
I'm taking a friend to a hospital appt for a procedure tomorrow, partly to give her company as she is a bit nervous about it, but mainly as she won't be able to drive for a few weeks afterwards. No problem at all, and she would do the same for me, but if she'd moved 4 or 5 hours away, then I wouldn't be able to do that. Nor take her a meal round the day after. Nor help her by getting bits of shopping in later in the week. etc etc.

Or I think of my other friend whose husband died unexpectedly last year, and how many people she has from her communities who have supported her in different ways - ways that seem really small, maybe just popping in for a coffee and a chat - but they have been absolutely invaluable to my friend. It can take time to build those communities.

Communal living is not for us either.

The retirement villages I am talking about, aren't 'communal living'. You have your own front door, your own kitchen, and living quarters, and can choose to never speak to anyone if you don't want to.

I think moving away when you retire, unless you are introverted, is a very bad idea. When you retire you need friends/family close by. Otherwise you can become pretty isolated.
People say make new friends as if that is really easy. It takes time to make new friends and its not always easy to do. You make acquaintances, but friends are different. I have friends where I live that I have know for 30 years, I can not just recreate that somewhere else.

I agree. We've been here 20 years, but are still not seen as 'local', because we grew up 15 or so miles away and went to different schools. Most people here have massive families sprawled over the town. We only really made friends when we had dc.
I guess you do get more time to make friends when you retire, and friendship groups suddenly start having lots more openings, but proper friendships take time.

Downsizing can work but as you say you need to find something significantly cheaper to make the numbers work. Lots of people move to flats or bungalows out of town. I’d say that most people have the downsizing option in their heads because it relieves them of the pressure to save such a lot for their retirement (which many/most haven’t done). But they find out later in life that the maths don’t work and they are largely going to be living on the state pension. Do you know your pension entitlement and is it enough? Because that may factor into your thinking about downsizing.

I think new they carry a premium. There have been lots of stories about people paying £150k for them and relatives not being able to shift even once they've reduced the price to £60k.

Meanwhile they are paying out £1k a month for care and maintenance costs.

Most people don't know what a headache it will be at the beginning of the process.

It isn't the case with every retirement scheme but is worth being aware of.

I think it's a bit like static caravans. Some people have a wonderful 20 years in them with no issues.

Others have site rules which mean vans can't be over 8 years old and they ramp up the annual charges.

Both can be a great choice in the right circumstances but you have to do your homework.

There needs to be more consumer protection with them. They clearly meet a need though.

Downsizing is something that people think is a great idea for other people to do, especially if they are deemed to be "boomers", but which is rarely desirable for the downsizee.

I would be happy to downsize. But what I want, a 2 bedroom bungalow with a garage and decent size living room, is really hard to find round here. The bungalows tend to be large and are turned into houses.

My IL neigbours when they retired kept on about them rattling round in their 3 bed terrace house - though also complained when we stopped over - but when their child grew up and moved out they were in exactly the same poistion - but they couldn't downsize as they needed the downstairs space - despite being out the house for work most of the week - unlike IL.

I did actually enourage them to move - more to property with downstairs toilting/washing or at least less steep stairs (ones they have so steep wouldn't be allowe now ) - which have subsquently been fallen down which also highlighted issue with no downstairs toilet when they got home from hospital - but I think they missed the window on moving. Also my parents - less house being an issue - more location they were rural needing to drive. In nether case would it have freed up much money but would have put them in better position for old age.

@trivialMorning I agree with you, it does not free up money, but improves peoples position. But there is often a lack of suitable places. The commercial sector are building retirement flats with large service charges. And bungalows are being converted into houses or even flats. But nobody is replacing those being converted.

I think it's 2fold, ultimately a 1bed flat in most areas is less than a 4 bed family home in most areas. However, if you're only going down by 1 bedroom it isn't probably worth it. However, a smaller house is also less council tax, heating, any cleaner/gardener/handyman costs etc. However, my parents are downsizing from a 3 bed to a 4bed, and their new house is costing more, it's literally just got a smaller garden and is a new build because maintaining their old house with a huge garden cost a fortune. So they will be better off day to day, plus it'll just be much easier with no surprise costs!