Would I be crazy to do this?

[Aquamarinescarf]

I was widowed 19 years ago. I'm now 63. My husband (who was quite a lot older than me) and I had managed to pay off our mortgage, so I was left with a decent-sized house that has boomed unbelievably in value.

I've enjoyed my work till recently, so I'm planning to retire in March. I'll have a company pension of around £17k pa and in three years when I'm 66 I'll get the full state pension. I also have around £10k pa from my share of my husband's pension. Even though I have some cash savings, they're not going to enable me to cover the maintenance and costs of the house for long and I want to downsize. I'm sick of the gardening and maintenance, and I feel as if I want a break from the endless responsibility to cut hedges and get the boiler serviced. I'd also really like to get rid of most of the stuff in the house. I can't really explain, I just want to start fresh and unencumbered by the past, if that makes sense.

I'm aware of the drawbacks of buying a leasehold flat in an over-55s facility. I know that service charges can go up and that when the time comes to sell there's a reduced market to sell to. But... friends who live in a nice coastal town drove me past a development near them before Christmas and I thought 'Oooh, this might be answer'.

It's an independent place, not McCarthy & Stone or similar. 2-bedroom flats there are around £125k — less than half the price that they were originally sold for 15 years ago when the property was built. I don't really see how prices can fall much lower. Ordinary non-age-restricted 2-bed flats in that area start at over £220k and can go up to £500k+. I could afford one of those if I wanted, but there wouldn't be an on-site gym, a couple of acres of garden that someone else looks after, an on-site hairdresser, restaurant, cafe and physiotherapist. (I'm joking, but only half-joking).

My fantasy is that with the house sold I could give half the proceeds to our son and grandchildren so that I know they're provided for, and have enough left to buy a little flat in this complex and very decent lump sum to invest for income over the years. The service charge and ground rent come to around £6.5kpa: council tax, heating and water rates should mean I have a little bit of change from £10k pa, which is easily covered by my various pensions.

For the first few years at least, I would hope to use it as a secure lock-up-and-leave property. I'd hope to spend much of the year away, travelling and doing all the things my husband and I talked about but never managed to do. We have friends all over the place. I could have a camper van: I get two reserved parking spots.

I've mentioned this to a couple of other people and they think I'd be better off buying a much more expensive non-age restricted flat down at the marina, which will go up in value over the years. I find the marina area very busy in the summer and I'm not sure I want to live in the thick of the tourist area. Some of those flats are AirBnBs where people come t party for the weekend. And if I spend £500k on one of those I won't be able to be as generous to my son or have so much to splash out what I hope will be years of adventures. If the worst comes to the worst and prices in the over-55 place go on dropping, it really won't matter much to my son and grandkids if after I'm dead the flat only sells for £40k.

I know I'm very fortunate to have so many options, but the problem with options is that you have to make a decision. For so many years, first in my marriage and then later busy with my son and my work, I stuck with what I knew. Now I'm moving into uncharted waters and I don't want to make a major mistake. Everyone seems to have very strong opinions of their own and most are unable to understand why after living in a larger house for some many years, I'd want to downsize to a small flat. Am I mad to contemplate this?

It feels that, for you, not having to worry about maintenance or repairs etc and being able to lock up and leave a secure place is really important. Therefore, based on that, your idea seems sensible.

I think it's an excellent idea. What use to you is a lot of money tied up in a flat for when you die? You sound like you have sufficient income to live the life you want. You would essentially be bringing forward your children's inheritance rather than leaving them an expensive flat when you die.

It sounds like a great plan except for the part where you intend to give away half the proceeds to your family. You can't ask for it back if you need it. Hopefully you have another 1/3 of your life to go, but that is a long time to deprive yourself of assets for, especially after your DH gave you financial security.

I think that downsizing to somewhere with less of a maintenance burden and shedding loads of stuff is a good idea for the life you want.

But I wouldn't ever buy anything other than a freehold property myself. You hear too many horror stories about charges, and we are heading into such difficult economic times. At least if you buy outright and freehold, it stays bought.
Then you could rent it out, or have someone keep an eye on it when you are away.

You don't have to buy in the busy marina area. I'm sure there are small freehold properties with tiny gardens to be found. Preferably with parking for a camper van.

I’d love to know what you decide. Good luck!

It sounds like a great idea just be careful not to give away more than you can afford from your current property.

Find somewhere smaller but freehold

Make sure you have a good handyman close by to do any jobs for you

Don't give money to your child in case you need it

I feel very strongly that leasehold properties as you describe are a waste of money. Those charges are not insignificant. You run the risk of leaving yourself poor in retirement with this plan.

Be careful not to give too much cash away now, it might be needed later for your care (so you have the option of nicer care should you need it). If you don’t need it it’ll be in your will anyway.

If you want to travel, why do you wish to tie up £10k a year in service charges? You clearly drive, so I don't see the benefit of the onsite gym and hairdresser. Downsize to a smaller property, but save the over 55s place (AKA over 75s) for when you are properly old.

If you want to travel, why do you wish to tie up £10k a year in service charges?
Wherever I end up living is going to cost at least £5k in terms of council tax, utilities, water, insurance etc, and on top of that would be general maintenance costs, plus the non-financial cost of the stress each time there's a storm and the roof needs fixing, or a tree needs taking down in the garden. (£800 the other week, and it wasn't a massive one). It's not as if the charges at this place would be so very much more. I did say that the bit about having a hairdresser and a gym on site was half-joking, but I'm certainly far more likely to go to the gym regularly if I can walk there.

Those expressing concern over my finances — thank you, but there's no need. When my state pension kicks in I'm likely to be on close to £40k index-linked, which will more than cover all my needs. I'll also have a decent lump sum on retirement to go with my savings. This house has been valued at £1.2 million. (I did say this area had boomed!) So even if I give half of that money to my son and take only 4% pa from my half I'll be paying higher rate tax for the first time in my life. My mother and my aunt are both still alive and both say they plan to leave me something. Mum has cancer and won't be around for much longer.

My husband and I always worked but were never what very well-off. Now I find it almost embarrassing to think how much I have and how little, really, I need.

Agreed.

If it works out that’s great but I’d resist giving your money away to your son if it means you will no longer have a choice to move so easily if things change for you.
A friend who moved into a retirement complex found the expectations of other older residents too much and moved again; if you want peace that may be easier outside of a complex.

As your pot is so big I say why not but you need to look at tax implications gifting so much money. I would also think half is slightly too generous.

Most people don’t end up with 40k PA as a pension plus there is still a pot of 500k. When you wrote your initial post I was very much don’t be daft but the figures are good. I also see the downside of any of those lease flats and would probably buy a small house.

If I was you I would gift a third and buy a small house. There is no way I would buy a flat in a marina complex, too much partying if people rent them out.

Thanks for your ongoing responses. You're right, I'm in a financially very secure situation. Even if I spend every penny of the £600+k cash I'd have, I'd still have looked after my son and his family more than adequately. It won't matter at all if the retirement flat only sells for £45k when I die or move into care.

I know it's difficult for others to get their head around but I don't want a house. I've been a house owner for 37 years, ever since I married. With my late DH I've renovated, improved, gardened, all that, and I just want a break from that level of responsibility. These days in my area it's difficult to find tradespeople: they're all booked up six months or a year in advance. The gardener I've always called on for a few days here and there to help tidy the place up is only taking regular weekly bookings now. Everything seems more complicated than it used to be. I want to simplify.

I'm also struggling at the moment with new neighbours. They're a smart young 30-something family with a Range Rover on the drive and they seem to communicate by screaming at each other much of the time. The children aer the noisiest children I've ever encountered. The retirement complex at least seemed to offer the reassurance of not living with children! Sorry if that sounds awful. We've had neighbours with children before but this family is something else. I'm sure there are other annoyances to be expected from a retirement place.

I've set up an appointment to go and look at the two flats available in this place in a couple of weeks, if they haven't already sold. Then I'll have a reality check.

I've been really responsible all my life: done the right thing, worked consistently, been a strong parent to my son after his father died. Now I have a strong desire to give up the burden and just have some fun. I'm not talking toy-boys and cocktails, I just want the burden of being sensible, looking after a house that's far too big for me, always on the alert for maintenance issues, to be lifted.

Sounds like a great idea to me. I would buy the largest flat they have in the development, though, especially if you are allowed guests. You will be amazed how much stuff you need, even if you have downsized.

I hope you have a great time enjoying yourself.

I'm a similar age, although not widowed, and I think your plan is a good one. You obviously have the income to cover the expenses associated with the flat. However, have you actually researched freehold properties in the area? You could buy a small house or bungalow, in a quiet area, employ a gardener and find a local handyman - if you're in North Wales, I'll given you Pat's number 😉

Make sure you have enough money set aside for travel, adventures and fun. Give some cash to your children and grandchildren, but not all of it.

Whatever you decide, good luck.💐

Seems like a sensible idea t me and it will give you peace of mind.

@Aquamarinescarf I have been considering similar options myself. Would you be comfortable sharing the location? You can dm me if you would rather not share on here.

I live in a leasehold flat (but not an age restricted one) and happily pay a service charge so that it’s someone else’s responsibility to paint the windows, landscape the garden, fix the heating etc. So I can definitely see the advantages of living in a complex like the one you’ve seen.

My word of warning would be about the business viability of the complex and what the plans are for it long term. The developers have already lost a lot of money on the value of the properties, it seems. How are they planning to recoup those costs?

My Parents in law bought a flat in a retirement complex. Over the 8 years they were there all the ‘extras’ gradually got eroded although the service charge didn’t. The property itself lost all its value (mostly because the extras were gone!) and so they were trapped: even though they had invested their remaining capital it was not enough to buy a flat in the same area as house prices had risen so much in that time, and the older they got the more they needed cash to pay for carers. Pil sadly passed away last year and their flat is an expensive burden to their only son (dh). We cannot sell it for love or money. We cannot sublet it. The flat is sitting empty but we are still liable for the service charge of over £300 per month.

Alternatively, my great aunt lived in a retirement complex for her later years which was well run and she was very happy there.

So it’s by no means a terrible idea but do your research and see what guarantees you can get about the future

Personally I am no where near your stage in life but I like your idea a lot. Sounds sensible and thought out to me. My dad stayed in on for a short time I enjoyed it, untill things did not get fixed and every request was a hassle to the staff.

I would want to see how the service costs are calculated and historically what they have went up by in past years. Do they go up in line with inflation for example or how are contractors picked for big jobs, is it always the cheapest?
Do they have SLA's for things getting sorted.

Also, what are the other people living on site like? Is there a sense of community or what not?

The developers have already lost a lot of money on the value of the properties, it seems.

Sorry, I don't understand the question. The developers originally sold the flats to the first purchasers, as new homes, for £250k+ some years ago. They've already got their money back. If I now pay £125k the money goes to the owner who's been living there, not the developed.

Sorry, I was assuming the managing agents are also the developers as was the case with my pil’s flat. They built the properties and retain a percentage of the resale value each time they are sold on. They also borrow money against the value of the property that they own the freehold on, so as a whole their business model is affected by the decrease in property values.

I guess another way of looking at it is: who are the managing agents (this is the company that collects and administers the service charge) and what relationship do leaseholders have with them? What are their plans for the future? Are they required to maintain a certain level of services for the service charge? Are they required to listen to leaseholders? What happens when there is a problem and how will your voice be heard?

In my block of flats we have a very active leaseholders committee, and our managing agents share our values. In the case of PIL it was a company who were (understandably I suppose) in it for the money alone.

All this is what I hope to find out in a couple of weeks.

I'm glad I don't sounds completely crazy to at least some of you. I have a real need to simplify, get rid of a lot of stuff and move into the next stage of my life less encumbered. I know lots of people are very attached to stuff and the past and preserving things for the next generation, but that's never really been me. I'm actually looking forward to saying goodbye to a lot of things I feel I've had responsibility for looking after. Don't know what's happened: I have a nice, comfortable, reliable life where I am, but I'm ready for something new now.

I think it sounds like a great idea OP, and I have never understood why people focus so much on what they will be leaving behind. The OP is in her sixties. Why should she have to focus on what she will leave behind when she dies at her age? Enjoy your money and make it work for you OP. I wouldn't distribute any cash to family just yet, get yourself settled into retirement first to see how much money you actually need to have the lifestyle you want.

The only thing I would do is provide some ready cash in my estate to cover the ongoing service charges of the flat when the time comes as these flats can take some time to sell. But that's it, sell up, move to the coast and enjoy!