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?

agree; like most "clever" ideas touted? just for rich people 😩

Equally, if there's only one of you, you need even less space and the benefits of a smaller place to clean, maintain and heat would be greater.

I really want to downsize from my four bed detached (perfect for growing family but they are older now and will probably be permanently left home in the next three or four years). I would love to live in a modern flat with a balcony but everyone keeps trying to put me off by saying service charges can rise and rise and I can’t do anything about it. Sometimes even doubling overnight. I feel like I’m too scared to do it now although i would love it.

Its going to kill us to downsize, but a huge 5 bedroom 3 bathroom 3 reception house IS going to be too much for just two old people, as it is we spend a lot of time keeping on top of the garden and lawns

Also we are extremely rural, we have to think ahead and move closer to a town that has buses as well as doctors etc

We are going to be looking at 2 bedrooms and it can be a flat or terraced, we don't mind, as long as there is off road parking and a bit of open space outside

The other problem with downsizing for us, is our rooms are huge, so our furniture is huge, all that will need to be downsized as well lol. Like when we moved here from a 2 up 2 down mid terrace, our tiny furniture was lost

~Will we make a killing downsizing - no, we will hopefully walk away with a good amount, but it's not about having money in the bank, it's about cutting the outgoings day to day. We spend vast amounts heating the house ( oil, coal and logs ) and our electricity bills look like telephone numbers , and fuel for the cars - its a 10 mile round trip to get a pint of milk. Oh our rates are extremely high for where we live, we pay over 3 times what our neighbour pays for the same foot print and they have more land ( theirs is classed as farmland ours isn't ) . We will both have state pensions and I have a small NHS pension plus a couple of work place pensions which we will be comfortable on but not if we are being faced with crippling bills keeping this house up to standard

This is a home screaming out for a young family, its out grown us

No private garden, many don't allow pets, leasehold, service charges, noise from neighbours.

I live in a purpose built maisonette and I would love to have a house but it's not an option financially. However, I do have my own private garden, I'm allowed pets and have no service charges so I'm lucky. There's no way I would want to live in a flat with no private outside space if I had another option.

It depends whether you need to downsize to release equity or downsize to a more manageable house. You may not release much equity by staying in the same area but you may significantly reduce your day to day costs. The house may be easier to maintain, such as a new build that doesn’t need maintenance or a much smaller garden that you don’t spend all your free time maintaining.

We haven’t downsized but we have invested money in updating and repairing our current house. We never got round to upsizing but had a couple of properties ( business and inherited) that we released equity when sold.
We had new windows, made the garden easier to maintain and have replaced aging and failing appliances with modern energy efficient model. I plan to have the loft boarded and extra insulation laid. So far the general work done has reduced our energy bills by more than 25%.
New quality appliances will hopefully last longer than we do and are all A** rated.

Originally we planned to buy a camper van to spend time exploring the UK but health problems meant it wasn’t an option. We would have moved to a flat so that we could go away for a month or more and have no garden to worry about. A flat would have been more secure as well.

We live rurally but with good access to everything. So best of both worlds.

I cheapsized and plan to downsize in future,

I moved from a big detached house to a terraced 5 bedroom townhouse in a town with genuinely appalling schools. So it was a lot cheaper. Released a load of cash some of which has gone to my kids as house deposits.

I'm now an hours drive from where I lived, so I can go back but increasingly more of my friends are moving out my direction as my original town is hyper expensive.

I'm planning to properly downsize at some point in the next ten years and buy a flat in Newcastle.

Btw - I already use a wheelchair and have problems with stairs. There's a lot of flats around with no lifts, which anyone contemplating being elderly doesn't want to buy.

My parents want and need to downsize because they can't manage the stairs. But bungalows are more expensive where they live than houses. It's a tricky one.

just for rich people

Nonsense. Here’s one example from my family: sold 4 bed family home in rural Cambs for £380,000; bought 2 bed bungalow on border of Cambs & Lincs for £200,000.

Still near family and friends. Extra money for holidays and days out which they otherwise wouldn’t have been able to afford on their low pensions.

Joined lots of social groups and made new friends in new town and now enjoying retirement.

If it’s not your choice that’s absolutely fine but it’s the way that a lot of not very well off people fund a good retirement.

When I downsize it'll be just before I retire so I can buy where I want to live.

I'm happy where I am and have friends here but it's not where I'm from nor is it where I want to spend my retirement. If you are living where you want to live downsizing might nit work for exactly the reasons you have stated @Shinynose

I'm even considering buying my retirement home now before prices shoot up so that when I sell up I have more equity released.

Good luck, living in a house bigger than you need can be a money pit.

Do your own research, and don't listen to people who aren't experts. The country is bursting with purpose-built flats that attract service charges, and if it was that bad then no one would be buying them. I had a flat for four years, and it was properly managed by a managing agent. Yes, unlike in a house when you can save up for / put off having big jobs done, you are duty-bound to pay a fee monthly, and yes, it may be that during your time in a flat "major works" are due which someone who then buys your flat won't have the share of the expense of, but that's just how it works.

I do a lot of work for a managing agent, in the buildings which they manage. No one ever tells me they regret moving to a flat, because it was right for them.

As for the escalating service charges, again do your research. "Doubling overnight" is just not what happens in the real world.

I have quite a large 4 bedroom house (the biggest house I will ever live in) and my neighbours on both sides are elderly and downsized into their current homes from massive homes with swimming pools.

I plan moving to a slightly cheaper area in about 4 years and to a smaller house, probably three bedrooms so this will free up about 150k after fees as stamp duty etc are so expensive. The move would be more about a change in lifestyle than money.

Don't forget the ongoing costs associated with maintaining your current house though. My family home desperately needed money investing in it, new windows for one thing. I just didn't have the resources to do that. The new owners have gutted it.

I released some money from downsizing, but not as much as I had expected to. I could not afford to move to where I wanted to move and still release capital, so I moved to a modern bungalow on the outskirts of the city I already lived in. It's about compromising on some things to get others.

I really don't like my actual house much, it's square and boring, no quirky corners, but OTOH, there is nothing that needs doing, it's well built, well insulated, everything is manageable - my bills are 1/3 of what they were in the old house. I have a financial cushion for emergencies. I am loving being nearer to open countryside even though I'm further from shops, transport etc.

Can they have a stairlift? DM couldn't manage the stairs and understandably didn't want to move as she wouldn't have been able to take her cat and so we had a stairlift installed for her.

Because downsizing from a 4 bed detached doesn't mean "buy a 3bed semi"

It means buy a 2bed terrace, or a 1/2bed bungalow, or a 2bed "over 55" flat.

Your example is moving from a family sized home to another family sized home.

It’s hardly downsizing to go from 4 beds to 3. I think 4 beds detached for £500,000 is on the fringe of SE and definitely not in a desirable area. Or it’s on an estate where there’s lots of choice. Therefore prices are condensed in such areas. 4 bed detached where I live in SE would be worth quite a bit more but you would get a significant saving by going to the town further up the railway line where there are estates everywhere. You could easily make £300-500,000. It really depends where you live.

Your situation is identical to mine. I love my outside space and the ability to choose when I get work done as opposed to paying for it at a lower rate but continually through service charges.

However, having lived in a flat with no outdoor space and service charges during my early 20s, but also with no worry about having to get involved in building work, I can easily see a time when I'd go back to that set up. It's all about what is right at the time.

Then don't. I only mentioned it as one of the compromises people make.

I am planning to retire into central London but my property is worth much more.

And to make it easier to maintain. No stairs to hoover. No grass to mow. No big flower borders to deal with

We intend to sell our 4 bedroom detached home for around £400k and buy a bungalow in a town or village with shops, doctors etc and importantly a station for up to the same price. We will not be tied to any location so will go where is best. We plan to do this before our early 70s.
For us, location is by far the biggest factor and getting there before we are too old to move.
I have seen my dad struggle with his mobility in a house that was ridiculously unsuitable because my mum refused to consider moving when they were young enough to do so.
Now he's gone, my sister,and I are tied to taking my mum everywhere because she's 87 and the buses are so unreliable.
Their situation was a real wake-up call for us.

Is it heck 😂
We downsized from a large 3 bed end terrace to a smaller 2 bed mid terrace, both Victorian with similar layouts. The move released £70k in equity which we used to renovate our new house, not that it really needed anything doing but we wanted to futureproof it so had new windows, kitchen, bathroom, heating and flooring throughout. We now have a house that’s in a quieter area, all new interiors, cheaper to run than our old house as it’s smaller and more energy efficient. The only thing we would need to do possibly if we had trouble getting upstairs would be to install a stairlift! Well worth doing.

I would also caution that old age creeps upon you unawares. My dad went from driving to being absolutely helpless with six months.
So at 70, you might think you've cracked this old-age tbing, but things go downhill very fast for most people from early 80s,in my experience.
My FIL was still hiking 5 miles at 93. Had a fall and is moving into a nursing home this week.

You’d need to downsize considerably to stay in or near same area: what about a 2 bed flat? Or move a great enough distance to afford a house of same size. What you’re outlining won’t reap the intended financial benefit, assuming you wanted to give 2 kids 50k each, you’d need to find something for 350k approx to allow for removals, legals, stamp duty and some upgrades to new property.

Thank you. I’ve really set my heart on ‘apartment’ living over a house or bungalow (which would be my second choice). I only own half my house (ex has other half) so can’t utilise all the money for myself.

Moving out to a cheaper area doesn't make sense if it means leaving old friends behind.