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?

You could downsize more than that though if you wanted to, a 3 bed is a family sized home still. Remember you'll also save on the maintenance and utilities, and as you get even older cleaning and gardening would be cheaper.
I'd say you're also rather lucky that £100k doesn't seem like a lot of money... If you don't want to, that's also fine.

Yes, a lot will depend on what housing stock is available in your area if you don't want to move. We used to live in a prosperous village with lots of charming, rambling 17th and 18thc cottages along the main street, beautiful, but a maintenance pain and often with lots of little steps up and down, which made them tough for older people with mobility problems.

When a much-disputed development went up on the edge of the village, objections meant that the developers were forced to alter the original plans to include a line of small bungalows along the border with existing houses, so as not to overlook them. This was unexpectedly successful in that suddenly a lot of older people sold their big old cottages and moved to the new bungalows -- they'd wanted to, but there was no appropriate housing in the area, and they hadn't wanted to leave the village they'd lived in all their lives.

My parents have ended up staying in their unsuitable house into their 80s, because there's nothing that works better locally and they refuse to move away.

My 4 bed is worth about £300k. nearny 2 beds are going for £200-225K. After moving costs and maybe something for decorating and repairs I’m banking maybe £60K. Doesn’t seem worth it. There are cheaper properties around but I suspect I’ll miss the space/privacy/garden too much.

Maybe it's because I don't "need" the money, that I'm not prepared to compromise on the location. My main reason for downsizing is to make ot easier to manage, but it seems daft to move incurred all the cost ofiving somewhere smalller and not come out of it with some cash, reducing my total assets.

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

That is a reasonable question. Don't know about OP, but although we could afford a 2 bed flat, we are reluctant to deal with all the issues that may go with flats: noisy neighbours, disputes over the freehold or lease, high service charges and leaking bathrooms being the worst. Also we have cats, which can cause problems unless all the neighbours are tolerant of them. The cats like us are used to having plenty of space inside and out.
Of course we are very lucky to be able to make this kind of choice, at least at the moment. No doubt we will end up in some horrible care home in a few years time.

We've just downsized...moved 3 miles to a 3 bed house as opposed to 4 bed/ 3 bathrooms.
For us it's a better area...more amenities, better transport links ( though we both drive).
Cheaper bills, easier to manage and a nice bit of cash. To be honest we didn't do it for the money...it was about moving while we can and thinking ahead.

there’s a place near me where a 4 bed house is 600k and a 2 bed ground floor flat is 300k. so someone there could change from the 4 bed to the 2bed, still live on the same street, but liberate 300k. Minus fees obv.

Family members who seriously looked found it was not really worth the hassle as didn't release that much money and if you've done maintance and upgrades can be risk as new house may have hidden problems.

We will downsize when kids are grown and DH next job needs a move - but expect it will be smaller property in more expensive area so won't free up money as such.

I think it's moves to a chepaer area and smaller houses that frees the money up - So London/SE to cheaper parts of the UK - and most people haven't done the research and sums and assume it's everywhere.

We want to downsize on a few years from four to 2/3 bed but we want a o be in a nicer area so the house we buy will likely be more expensive or at least the same as our current house.

I agree in response to your OP title. If we were to “downsize” from a four bed semi to a 2-3 bed bungalow in the same area we would need probably need an extra £200k.

Bungalows with any space are like rocking horse shit.

It's a very personal decision depending on what other money you have. Smaller places are often cheaper to run as well. 100k to drawdown and cheaper running costs would make a huge difference to quality of life for a lot of people.

I do sometimes think people aren't brave enough with their downsize. They lose one bedroom but still want a detached house with land so clearly that's not going to make much difference. (I do get you cany buy what doesn't exist in you area though)

Where I am, people tend to move into retirement flats, or new builds with small gardens. For some people, it'll be the savings in running costs as much as the equity release.

I do know someone who moved from a very large house to a 4 bed place ... And she described it as a huge down size ... It's bigger than our house!

It doesn't make sense for everyone - very little in life applies universally to everyone when it comes to housing/finances!

My Dad should have downsized - he does not need a four bedroom barnhouse on an acre of garden/paddock, two workshops, cow shed, barn, two reception rooms, office, conservatory, huge hall and massive kitchen diner with three bathrooms.

He lives in the kitchen diner/rear living room, using the downstairs loo and hall. The rest is hoarded junk and shite and the whole place is dropping to bits round him as he cannot maintain it (and never properly finished it in the first place).

But the point at which downsizing would have been sensible and do-able was about 10 years ago. And he ummed and ahhed and eventually refused.

Selling it then would have got him around 3/4 of a million, more than enough for a smaller bungalow property in a similar area.

If he lived in the same town as me in a similar value property, it wouldn't have, as a bungalow here would be almost as much as that, there are very few of them, and they are highly sought after and so highly priced!

Selling it now would not realise anywhere near enough for a smaller property, either in my town or nearer where he currently lives.

For us downsizing would mean moving out of London after retirement to a non commuter/holiday area, ie almost certainly 100+ mile away.
Our families live all over the place, our kids unlikely to work in London and most friends will likely move out too so no life to leave behind as such.

We've got a four bed in a village and will move to a two bed flat in the city. That should release 200k, but there are lots of flats in the city and we won't move into a good school catchment area so that means there's a significant difference.

It depends on the area. I've got a large 5 bedroom house which was great when the kids were here but it's way too big for me. It's valued around £550k . I want a 3 bedroom house in the same area which are between 375- 400k. I wouldn't even look at a bungalow as they're about the same price as my large house even though most are only 2 bedrooms near me

When we returned from living abroad 15 years ago we bought a 2 bed detached bungalow close to a small town partly so we shouldn't need to move again. We are now late 60s and though I sometimes dream about living by or close to the coast I think I'm already at the stage where the thought of tackling selling and buying seems far too onerous. I think the only way I'd move now is if I was left on my own when I might consider a flat for ease of maintenance but I know I'd miss living detached with a garden.
Several of my neighbours are in their 90s and are still living here independently so there is hope, though I wish there was a hospital closer than 40 minutes drive away.

I’m planning on downsizing from large 4 bed to average sized 3 bed. That will save me ⅓ of my current house value at best, ¼ at worst.

Yes you either need to downsize much smaller or change area. A slightly smaller property in the same area isn't likely to cut it

Also I think people don't view it as fully funding their retirement just partially

Where I live a 4 bed detached family house is about £400k, bed retirement flats are £150-200k and a small 2 bed terrace/cottage is probably around £250k so you'd free up quite a bit of money.
Cheapest bungalows are about £350k though!

Bungalows often cost a lot because they often sit on a decent amount of land so are ripe for redevelopment/turning into a dormer bungalow.

A lot of the bungalows sold round here are rebuilt or converted into family homes now.

My parents have a huge 8 bedroom house (all 8 bedrooms are huge) and lots of land. They do toy with the idea of downsizing and could free up a fair amount of cash and live somewhere more practical, but that home contains so many memories for them. I don't want money and they have plenty of pensions but I do worry how they will manage in the house when they are older.

As you say, it's easy to say people should downsize but often even if you have a big home that could release cash there aren't many appealing options.

I understand what you’re saying. However month to month the outgoings will be significantly less when you consider gas/electricity bills, council tax and general maintenance. Moving to a bungalow may save amendments to property such as stair lifts, help with cleaning and gardening.

I’ve literally just helped my dad downsize, he’s made around £150k to move into a bungalow from a very large 5 bed detached house. Bungalows are at a premium in our area and he paid >£25k more than asking price. He’s saved a fortune a month tho as he no longer needs ‘help’ to keep the house clean, tidy and maintained. The gas/electricity and council tax bill practically halved.

Of course it works.....unless you want a bungalow, which are a premium because of all the people downsizing with pots of cash.

We currently live in a 5 bed worth around 550k. In about 10yrs we'll sell and buy a 3 bed currently around 350k. Whatever happens to house prices it will be relative so will free up a decent sum whichever way they go

Down sizing can mean different things to different people.

For some it's releasing cash - possibly to buy care later and/or give financial flexibility.

For some its a lower bedroom count, cheaper house to run, easier to live in when infirmity kicks in ie smaller/more manageable garden.

For some it's living to an area closer to children, shops, busses, trains. An area that is easier to live in post driving.

For some it's a McCarthy Stone apartment - selling up and deciding assisted living is the future. (A real pain to sell post parents' death.)

For many it's a combination of these things and coming to a compromise solution.

We are south east as well OP and our home will be worth approx £1.5m, once we've completed the work, we are planning on selling up in our mid 60s and could get a 2 bed cottage or 2-3 bed in a local town for £500 -£700 in todays market, so we have pensions but will potentially after costs have a £700k lump sum. We aren't replying in this, but it's on our radar as a plan.

Going from a £500 to £300 won't be worth the effort, I'd rather get lodgers, or rent out and use the money to rent elsewhere!