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?

@blueshoes 60+ is NOT the time of your life to take strangers into your "spare bedrooms" unless absolutely necessary and so far people on this thread are not discussing those rare absolute dire situations.
downsizing doesn't seem to work well in the current housing market period.

There are retirement flats aimed at downsizers which can be considerably less.

Where i live a 4 bed detached is anywhere from £800k - 1.3m.

A 2 bedroomed flat in the same area is about £400k. So a downsizer could be releasing half a million quid.

@LovelyDaaling what my parents and in-laws found was that, after retirement, lots of their friends moved either to free up cash, or to be closer to family, or to realise some long-held dream like living beside the sea (and thsts before they all start dying). Maybe it's different if you have always lived in your home town or somewhere like Bognor Regis but my mum only has one friend left in our home town. Everyone else is long gone.

We have a detached 4 bed and are currently looking at a semi detached, ex council house in a pretty village with a huge garden.
It would be substantially less interior space but for us, gardening is life. It would free up £180k but done of that would go on moving fees and doing the place up.
Our little market town has been perfect for raising kids but we are craving a quieter life now.

Bungalows are expensive. What you outline is why people stay in larger houses. But the maintenance is the killer. Get a small house you can manage more easily.

Are you planning to move again? A house with a huge garden would not have suited my parents once they hit mid 80s.

Another reason to downsize when DC leave home is that it forces you to clear out a lot of crap. Anyone who has had to clear a parental home in which they grew up 40 years previously will tell you that it's a pain in the arse, not just for the sheer volume of boxes of crap but also emotionally (the photos, the trinkets, that old board game you used to play with your grandma, etc).

We downsized in two stages, starting even before DC lived home, because we owned a house out of town but we were spending half our lives ferrying teen DCs about. So we sold up and moved into a smaller rented house in the city, which already meant one substantial clearout. 10 years later we moved to a nice 2-bed flat in a place near the sea, threw away almost everything as if we were clearing out after our own deaths (when the landlord came round to sign off on the final inspection we sat at the three remaining plastic garden chairs in an otherwise empty house), and bought new stuff mostly from Ikea. If we both keel over tomorrow our DC will just have to throw away two wardrobes of clothes and they'll be set with a holiday flat in a great location.

I'm not planning on downsizing at all. I have a small four bed house, if anything I want to extend. I don't think by the time you have paid estate agents fees, tax, solicitors fees etc you will of save any money at all around here.}

Also. I want the children to come back and stay with me in the holidays so want some space.

I don’t think it’s so much about the money. It’s about not having a house that is completely unmanageable when your health starts to fail. It’s a big burden on your DCs or whoever ends up caring for you to manage and eventually have to clear out such a large house. And making adjustments to the property to facilitate you living there, coupled with a house falling into disrepair will devalue that £500k. Whilst it’s a good conditioned and desirable 4 bed family home, sell it, downsize and no one is saying the money will last you forever, but it’s money you can save or invest, use to top up a pension, or use to help DCs get on the property ladder themselves. Personally I’d rather see my children set up in life whilst I’m still around than them having to wait until I die and then finding themselves having to sell a run-down house and pay more inheritance tax before they get a single penny. Not to mention the emotional burden of having to sort through this house if it was the home they grew up in.

I think it needs some careful thought. There are significant costs for moving house and the old house might not be that much more expensive to run. In reality having a couple of rooms free which do not require heating is not really going to cost that much more. Council tax does cost more but the increase between say two bands is not that much. There are good arguments for managing IHT, but it is best to take advice on this.

@Nodlikeyouwerelistening that is very true for me. Upkeep, 20 wooden sash windows, I get a floor or an elevation done every year for three years, when the windows are done I spend that money on something else, get a couple of rooms decorated or something else like having the loft fully boarded with better insulation and a new ladder.

Decorating my hall, stairs and landings cost £3k last year, lots of doors and spindles.

I’m looking forward to having smaller rooms, fewer windows, less to decorate, lower bills, hopefully band C council tax.

It isn’t just about releasing equity, it’s about the whole package, including being able to drop a day at work, I’m aiming to drop another one in 5 years, working three days a week until I retire.

As I said upthread, don't underestimate how quickly you may go downhill. Right now, a smaller house with a lovely big garden might sound fantastic, but it may soon become a burden quicker than you think. What you feel like mid 70s bears no resemblance to what you will feel like 10 years from now. My parents' house was perfect until it wasn't, by which point they were far too old to move.

You don't need to, you want to. Lots of people move to a different area when they retire - it's why there are places that are known as places people retire to. And if by 'life' you mean social contacts, if you did move somewhere which attracts older people you'd probably find there are lots of opportunities for older people to socialise and lots of older people who have done exactly the same thing who are also keen to meet new people.

Leasehold, issues with outside space, issues with parking, ground rent and service charge

No small things

@Cyclebabble , it isn’t just about property though for some, I get to work less if I downsize. If I stay here in a too big house I have to keep working at my current pace until 67.

@Shinynose I totally agree about living near your life. Once you retire, friends, groups you attend, etc are really important in living your life and giving you a happy life. Moving and starting somewhere else again is really hard and you may just end up really lonely.

This is where we are now. Big semi on a hill. Steps to get to the front door, even steps to get to the garage. Clutter everywhere. Big garden. 20 mins up a hill to nearest shop. Can't get a paper or milk delivered because it's too far from nearest town.
My mum is entirely reliant on family, friends and neighbours for everything, but she still Can't see that.

Yup a bungalow here would cost the same as my detached 5 bed 3 rec house so we decided to not downsize ourselves to a 3 bed 1 rec bungalow. Instead we changed the uses of the rooms! We made a sewing room for me and a footy room for him, we have a study and a lovely big lounge and kitchen diner! Luckily all our children don't need our financial help!

I'd like to downsize to a flat in a few years, but to go from no mortgage to an annual service charge of £2-3k feels like that would eat up quite a chunk of the money released.

It depends what you want out of a downsize

If someone needs a smaller home but not necessarily a cheaper home, or something all on one level or with a downstairs bathroom etc etc, it may make sense whether money is released from the transaction or not

If someone needs to free up money and can achieve that in the area they live in with the housing stock available then that makes sense too

Neither of these apply to me. I wouldnt be able to find anything cheaper unless its a very small flat and Im not prepared to live in that and I wouldnt buy a retirement property due to the service charge requirements.

I may need a downstairs bathroom at some point, but I could have something built into the utility room if that time comes.

I thought like that @Romeiswheretheheartis until I realised how much money I spent on upkeep. I’m not intending to move to a flat anymore as I’ve decided on a stone cottage or Victorian terrace in a particular part of a city if I take the plunge and move to a city.

I spend more than a service charge on exterior maintenance most years.

This is really bad advice, people need to be stimulated and embedded and engaged with their community, to move out of it and try to join and establish yourself in a new one out of the blue is hard work, not always realistic, not always possible and will leave people at risk of physical and mental health issues due to loneliness.

And you absolutely have to off-set the cost of service charges against what you'd have to pay or at least save each year for maintaining a house. You'll likely be paying more still due to cleaning and lighting of communal areas, granted, but that's part and parcel of the experience of living in that type of home and should get value from it.

I've seen a house around the corner from me for £150k less than mine's worth. If I spent £50K on moving costs and doing up that house to how I wanted it I'd have 100K to invest, which should bring in enough for some lovely holidays.

At 68, we're wondering our way through this. But we haven't decided where we want to go. We shall be selling a lovely house with a magnificent view. We'd expect to give our DC some money for a deposit but they already have the proceeds of two grandparent inheritances imminent or banked. We would like to buy a decent living space plus two bedrooms with bath rooms, and some easy to manage outdoor space, plus guaranteed parking. And anywhere pleasant, that seems to cost more than the house we shall sell.