Dream Retirement Property - but can we afford it?

coyrls

Pile_o_stone said:

We have a lovely looking grade 2 listed home built circa 1750. It has 400mm thick sandstone walls, exposed beams, large bedrooms and reception rooms and large gardens and we are beginning to find it a huge burden and we just about in our 50s. The last thing I'd advise someone looking to retire would be the money-pit that is an old home in large grounds. We are looking to downsize and build/buy an eco home with small or zero utility bills, no damp, no drafts, no cold rooms, no huge heating bills, no isolation from being away from people. No stress every time we spot another crack in the wall, no expensive tradesmen specialised in Lime mortar, etc. etc.

From your post, it sounds like the issue is that you are apart from your OH. With the money you have now, you could buy a nice, comfortable eco house and retire today. Enjoy the hard work you have put in now rather than later - don't put it off and don't buy a money pit that will just cause you stress! 

Maybe DairyQueen has put an offer in, you could be ruining your chances of a sale!

MallyGirl

My Mum and her husband bought a big place in Devon when they retired and sold up in Harpenden (prime commuter belt). It is not listed but it is huge, has a complicated wet heating system which seems to go wrong all the time, they are on a serious slope so the bins have to be taken to the bottom of their shared drive by car and the garden is very steep. Rooms are big (living rooms is 35' x 20') and ceilings are high so every decorating job requires a tower or scaffolding. Heating bills are astronomical and they have to pay a gardener to come every week to keep things under control - they bought the lawnmower equivalent of a roomba but it couldn't cope with the slope of the lawn.  They are now in their 70s and having more frequent discussions about when they should sell up and move to somewhere more sensible. I hope they don't leave it too long - they have neighbours my age with a family and then no one for quite some distance. We are 3 hours away with my brother and step brother further than that.
We nearly bought a listed place 25 years ago and I have driven past it several times - each time breathing a sigh of relief that we prioritised logic over heart. Our current house is big and Victorian so has plenty of issues (damp chimney, drafts, single glazed sash windows, massive bills but I still need to wrap in a blanket to watch TV in the winter) but it isn't listed and we are still working.

DairyQueen

Deleted_User said:

Rule of thumb is “the rule of 90”. 

“ 90 – age = maximum % you should allocate to real estate”.

The logic is simple: as you get more wrinkles, you need liquidity and income rather than space. Most will end up in a nursing home.  The rule isn’t perfect and does not work for all scenarios; but its a nice little test. 

If you are 60, that means 30% of your net worth could be in real estate and you’d be on a financially sound footing.  If your new house is worth 650K, then you need 1.5M left in joint (liquid) assets after buying the property.   That number accounts for your state pension, but does not account for your other DB pensions, so you could actually afford the house with less liquidity left over. 

You also need to keep in mind that as you get even more wrinkles, the rule of 90 stipulates more liquidity. And that at some point you will need to sell the place as it will be hard to look after acreage and the extra bathrooms.  

The one advantage of reduced life expectancy is that you are unlikely to be buried with too many wrinkles. I take your point on the need for liquidity as costs for domestic support/ residential care kick-in but I'm not likely to make it to a care home and Mr DQ has sufficient pension to cover a substantial portion of care costs, the rest being sourced from house equity as a last resort.

The need to sell at some point in the future would be part of the package as Mr DQ is unlikely to want to rattle around in a big, old pile on his lonesome.

The rule of 90 is a new one on me. I see the logic for high liquidity for those reliant on drawdown for a substantial part of their income but how do you include/value DB benefits within that algorithm?

x 20 annual income (per LTA test)? This undervalues the real worth as it would take significantly more capital to provide an equivalent annuity or sustainable drawdown. If £30kp.a. represents 3% SWR then the DB is worth the equivalent of £1M in liquid assets.  Add in our £600k combined SIPPs plus £300k in cash, then £500k currently invested in property and the implied value of our total worth is in the ballpark of £2.4M. Lawd Rodders we are millionaires!

30% of £2.4M = £720k. This method of valuation suggests we can afford the £650k purchase price. Going forward... again how to value the DB pension within the rule of 90 when you reach 70 or 80? Does it remain at the equivalent of £1M in today's value? Or less as annuity rate would be higher?

OldMusicGuy

Deleted_User said:

This kind of thing is very personal. We bought 33 acres about 4 years ago. And a tractor. Its a retirement project, although I am still working. The nearest neighbour’s house is 1000m away (great people, we visit regularly). I know its many peoples’ nightmare.  We love it. Our dogs love it. Our ducks love it. Our bees love it. At some point we’ll have to sell. Hopefully not too soon. 

Indeed. I think it's important that you buy something that supports your desired lifestyle in retirement. The mistake you can make is to assume that by buying something it will provide that lifestyle. An idyllic house in a rural location doesn't necessarily mean you will be having an idyllic life, especially when you are older.

My uncle retired to a small castle, a large manor house with actual Norman castle ruins and its own chapel. It was an amazing place. He fancied living the life of a country gentleman (originally he was from very ordinary stock). The cost and responsibility of maintaining it caused him to have a nervous breakdown and ended his marriage. Maybe that affected me as a youngster!   

barnstar2077

Thinking about it, I would find a nice detached house in a good location that wasn't too big, or had too much land, somewhere I could stay long term and not have to worry about anything.  Once you are both retired you will probably want to be out a lot to begin with anyway! :  )  All the extra money you would save alone would pay for an awful lot of weeks in beautiful hotels.  Incredible places with amazing grounds, that you could enjoy, and then go home stress free.  Like the difference between looking after the grand kids for the afternoon, or having a child of your own at home! <Shudder>

DairyQueen

AnotherJoe said:

DairyQueen said:

The property is listed (Grade II) and it’s large.

Strike One.

Madness to buy as a retirement home but this is our dream home.

The cost of maintenance and insurance is likely to add at least £10kp.a. to our non-discretionary expenses.

Strike Two.

Our planned starting ‘number’ was around £45kp.a. from 2021 to include a generous holiday allowance and a lot of fat. This property would eat all of the fat and (I suspect) the holiday allowance if I was widowed

Three strikes.

I entirely fail to see why this is a dream home, sounds like a nightmare  to me, but then again I also fail to see why you both are continuing to work when you have limited life expectancy (genuinely sorry to hear that  )

Wake up before you sleepwalk into a nightmare house.

Retire now, into a house that isn't a whacking big boat anchor on your truncated retirement plans

Yep, the common-sense thing would be to buy a new 4-bed bungie (UPVC, triple-glazed, heat pump, solar panels). The dream definitely isn't this kind of financial commitment. Problem is that 'sensible' has always been my middle-name and I am in danger of being sensible once too often. That's why I seek a range of well-informed opinions.

The dream is space, peace, privacy, character, fields and trees. These are highly sought-after and only the building's antiquity and listed status prevents an extra £100k on the price. If this was a new barn conversion or of conventional construction the London escapees would be in a bidding war. I can't overestimate the extent to which lockdown has impacted our local market. We are smack-bang in the price range, and seeking the property type, most requested by Londoners. The market was crazy before the SDLT reduction was announced, now it's a bloodbath.

Mr DQ continues to work because he enjoys it and he would be hard-pressed to keep himself occupied in tiny home otherwise. He earns well and is able to pick his clients and that's a great position for him. As a former weekend visitor he has yet to establish a life here and will likely take some time to do so. Incentive to stop working will increase when we are settled in a home that gives us pleasure and roots. Yes, it could be a financial nightmare but isn't the potential pleasure worth the risk?

OldMusicGuy

Mr DQ continues to work because he enjoys it and he would be hard-pressed to keep himself occupied in tiny home otherwise. He earns well and is able to pick his clients and that's a great position for him. As a former weekend visitor he has yet to establish a life here and will likely take some time to do so. Incentive to stop working will increase when we are settled in a home that gives us pleasure and roots. Yes, it could be a financial nightmare but isn't the potential pleasure worth the risk?

It depends on your attitude to finances. If you are relaxed and don't worry much about finances, then it's probably worth it. If finances cause you stress, then you might find it causes you problems (like it did my uncle).

I fall into the latter category. I worry a lot about finances and thus a more affordable property (that definitely will not stretch us) appeals a lot to me. The cheap running costs of a brand new, well insulated home also appeal to me. But YMMV.

One thing - are you sure this is Mr DQ's dream as well? From the way you talk about him he doesn't sound that bothered but hopefully that's not the case. 

Oh and by the way, no uPVC for us. Aluminium windows outside (zero maintenance!) and hardwood frames inside. Lovely 
 

MallyGirl

The aspect that most comes out to me is the desire for peace and quiet but that is probably rather amplified by where you are living right now. You could improve this immeasurably without gaining such significant worries.

Pile_o_stone

coyrls said:

Pile_o_stone said:

We have a lovely looking grade 2 listed home built circa 1750. It has 400mm thick sandstone walls, exposed beams, large bedrooms and reception rooms and large gardens and we are beginning to find it a huge burden and we just about in our 50s. The last thing I'd advise someone looking to retire would be the money-pit that is an old home in large grounds. We are looking to downsize and build/buy an eco home with small or zero utility bills, no damp, no drafts, no cold rooms, no huge heating bills, no isolation from being away from people. No stress every time we spot another crack in the wall, no expensive tradesmen specialised in Lime mortar, etc. etc.

From your post, it sounds like the issue is that you are apart from your OH. With the money you have now, you could buy a nice, comfortable eco house and retire today. Enjoy the hard work you have put in now rather than later - don't put it off and don't buy a money pit that will just cause you stress! 

Maybe DairyQueen has put an offer in, you could be ruining your chances of a sale!

Haha, I really need to change my sales patter! 
(Actually we are not selling just yet, but the plan is to downsize once the nest is empty).

DairyQueen said:

AnotherJoe said:

DairyQueen said:

The property is listed (Grade II) and it’s large.

Strike One.

Madness to buy as a retirement home but this is our dream home.

The cost of maintenance and insurance is likely to add at least £10kp.a. to our non-discretionary expenses.

Strike Two.

Our planned starting ‘number’ was around £45kp.a. from 2021 to include a generous holiday allowance and a lot of fat. This property would eat all of the fat and (I suspect) the holiday allowance if I was widowed

Three strikes.

I entirely fail to see why this is a dream home, sounds like a nightmare  to me, but then again I also fail to see why you both are continuing to work when you have limited life expectancy (genuinely sorry to hear that  )

Wake up before you sleepwalk into a nightmare house.

Retire now, into a house that isn't a whacking big boat anchor on your truncated retirement plans

Yep, the common-sense thing would be to buy a new 4-bed bungie (UPVC, triple-glazed, heat pump, solar panels). The dream definitely isn't this kind of financial commitment. Problem is that 'sensible' has always been my middle-name and I am in danger of being sensible once too often. That's why I seek a range of well-informed opinions.

The dream is space, peace, privacy, character, fields and trees. These are highly sought-after and only the building's antiquity and listed status prevents an extra £100k on the price. If this was a new barn conversion or of conventional construction the London escapees would be in a bidding war. I can't overestimate the extent to which lockdown has impacted our local market. We are smack-bang in the price range, and seeking the property type, most requested by Londoners. The market was crazy before the SDLT reduction was announced, now it's a bloodbath.

Mr DQ continues to work because he enjoys it and he would be hard-pressed to keep himself occupied in tiny home otherwise. He earns well and is able to pick his clients and that's a great position for him. As a former weekend visitor he has yet to establish a life here and will likely take some time to do so. Incentive to stop working will increase when we are settled in a home that gives us pleasure and roots. Yes, it could be a financial nightmare but isn't the potential pleasure worth the risk?

I'm not sure the only options available to you are 'small retirement bungalow on a housing estate' and 'mansion house in 50 acres of arable and mixed woodland'. If your criteria is to have a reasonably large house and garden then I'm sure these are available.

As far as your OH is concerned, perhaps he's handy and would relish the challenge of renovating an old house? I know I did but that interest has waned after 10 years and lime burned arms, broken fingers and £150k poured into a house for £30k financial gain.

Anyway, you asked the question and the direction of travel from forumites seems to be 'don't touch it with a bargepole', and yet you are unmoved. I'm not sure why you asked the question, but hey ho it's your life so good luck with the purchase of your old house, and welcome to the "Money Pit Owners Club"!

DairyQueen

OldMusicGuy said:

Sounds like this place will be great for a few years and then become a potential burden. We were planning to downsize and move into a "dream home", ok it was a new build but it was in a beautiful position in a small village, surrounded by fields, big garden and quite large. Also a chalet bungalow, with 2 beds upstairs but also downstairs bedrooms and a bathroom. It was also being built to our spec. It really was the "dream" retirement home.

For a whole bunch of reasons it fell through after 18 months and we rapidly had to find a new place just as COVID was hitting. We are now buying a new build semi with a small garden, still in a small town/village. We constantly say "thank goodness we didn't go through with the other place." The place we are buying is better designed, the small garden will be easy to maintain and we are within half a mile of a main line station. It's also more affordable, which means we can kit it out with nice furniture that should last us until we need to move to a flat/retirement home.

We now realise the garden at the other place would have been far too big for us, the room sizes were too big (a large lounge for example, which we just didn't want) and we got a bit carried away with the "lovely" location. We would never have looked at the place we are buying now because it didn't fit the "dream" but we realise now it will be a much better place for the next 20 years plus than our "dream" place. The development we are on isn't massive and we felt it will be nice to have people around us as we get older. Many of the other residents seem to be a similar demographic to us (retired with grown up kids).

So just wanted to share that our experience was that the "dream" can sometimes colour your vision regarding the reality of downsizing and retirement. It certainly did for us.  

Nice to see your post OMG and thanks for sharing. I was wondering how your move was progressing. Sorry that you have been through a basin-full of hassle but pleased to hear that you are well on the way to a great outcome.

There is no doubt that the house we love is too big but we currently crave space. We are also desperate to be free of traffic and neighbour-noise. I hope that you enjoy years of quiet neighbours but there is no guarantee when you live in close proximity.

Another experience:

My elderly parents have lived in a detached bungie in a street full of similar properties and like-minded neighbours for 20+ years. Last year their elderly neighbour entered care and next door has been rented. Very nice, young family but they like to share their taste in music and at loud volume. Even my very hard of hearing dad has remarked on the noise that now regularly pervades his formerly tranquil garden and conservatory. 

The only way to guarantee peace is to put as much space between you, traffic  and neighbours as possible. Sounds harsh and nimby but peace is at the top of my 'must have' list and it seems that taking on the risk of an old house is the only way we will afford it.

I'm still humming and hawing.