Downsize to release funds for retirement

Flugelhorn

we downsized, not to release funds but because we couldn't find anywhere we liked in the new area - looking to upsize soon.

daveyjp

Cobbler_tone said:

jimi_man said:

Unless you're planning to move to a small flat somewhere, downsizing will rarely release enough in the way of funds. 

Apart from people like my lucky colleague. He would have earned c£50k a year throughout his working life. He sold a pretty modest (but nice) family terraced house in Notting Hill and moved to the Peak District with well over a million in the bank. All about location, timing and your desire/ability to relocate. 
If you have any house worth £300-500k in a lot of areas in the UK you have options but depends on the definition of 'enough'. Enough to retire just on the gain, probably not....whether you would want to live in some of those options is a different matter!  

If people fail to realise the cost of estate agents, stamp duty, legal fees and removals, as well as the associated stress levels....that is 'moving house 101' and they should probably stay where they are! Downsizing/upsizing for practical reasons normally makes more sense.

Same as my friends.  Moved from Richmond on Thames  to the west country. Half a million to add to their retirement pot.

poseidon1

gorgeousme said:

Just wondering, who has or has planned to downsize to fund retirement?

Did so 10 years ago to retire early due to a health issue.

 Downsized from 4 bed house to a 1 bed flat ( already owned prior to). Although this released alot of capital for investment ( London prices), the downsize has proven a bit drastic so looking to upsize to a probable 3 bed flat. That said the downsize release of capital left the Sipp untouched over the period, which has benefited from capital growth and income roll up. State pension has now kicked in thereby rendering any future access to the Sipp ( beyond TFC) liable to 40% tax.

However, being single with no dependents and  no geographical limitations on where to live, probably means I am in a more flexible position then most to continue accessing capital from the next home by way of equity release in future. Given my particular circumstances and general outlook on fiscal matters, I have no issue with carrying mortgage debt throughout retirement, an attitude probably wildly at odds with the majority on this forum.

Having said all the above,  ( and as mentioned by others) being a London homeowner benefiting from the obscene house price rises here, has been the primary factor in being able to downsize into early retirement.  In that regard, geography certainly helped.

Albermarle

dunstonh said:

There are two frequent errors by those planning to downsize
1 -  is that they don't take into account costs.   The forget stamp duty, legal, cost of moving, cost of house clearance to remove things they cant take with them etc.
2 - When they start viewing smaller houses, they begin to realise that they have got used to the space and cannot envisage downsizing as much and end up with a much smaller amount after they revise the scale of their downsizing.

I would add a third factor.
For some at least househunting with a big budget will lead them to look at more desirable locations, such as somewhere with a sea view, in Devon etc .
So smaller property, but possibly pretty much the same price as the old one.

arthur_fowler

We did. Freed up £130k after factoring in the decorating needed to bring our new house up to what we wanted. That sum was what we were aiming for and allowed use to retire at 60/59 and now have a house that is plenty big enough for us and requires less maintenance than our old one.

LHW99

We did by moving to a cheaper area and having a smaller garden. House isn't too different in size, but has needed work to bring it up to standard (and make it how we want it).

That released a reasonable amount - not enough by itself for a retirement but plenty to enhance the retirement we already had.

Pat38493

We are currently in the process of downsizing our house.

We have just exchanged contracts on the sale of our current house.  We are lucky enough to live in a large 5 bedroom house with plenty of space, which we don't need anymore.  This and freeing up some equity drove the decision to try to downsize.

We initially chose a house to move to which was a 4 bedroom a lot smaller than the one we are in now.  However we had second thoughts and pulled out of that purchase, partly due to iissues with the survey but this also made us realise it just didn't feel like the right move.

We have now chosen a 5 bedroom house in a town about 20 minutes away, so the same number of bedrooms but about a third smaller in square footage.  Also a much smaller garden without a high maintenance pond setup, which I feel will make a significant difference to both costs and amount of time invested.  Fingers crossed this will go through - it's just come out of probate and we are jumping on it as cash buyers.

Also - the house does not have a study or sewing room, and we will hijack 2 of the bedrooms for these purposes, so it sort of has the exact amount of space and rooms we were looking for.

Importantly, it is 5 minutes walk from a train station with easy connections to Chester / Manchester / Liverpool and a town centre with pubs, shops, weekly market etc.  We wanted to try out town living for a number of years.

After all the costs and items are taken into account, plus about 2 months of accomodation and storage costs in between, we expect the downsize to liberate about £110K of equity.  This is after also setting aside £20K for initial home improvements to the new house, even though it is actually perfectly fine to live in already, so we may not end up spending all that money (although OH seems to have already committed serveral K today in re-upholstering sofas!).  This is also after several thousand being wasted on the original house we planned to buy in surveys etc.

So not a huge amount of money freed up in the end, but it is pretty much spot on the target that we originally set and makes the difference to allow me to stop work this year instead of doing one or two more years.

I suspect this won't be our last move and we will probably downsize again in 20 years or so, but who knows - it won't be required from a financial point of view unless care costs loom.

gorgeousme

This is so interesting. We are living in a 4 bed house and we would like to move into a 2 bed property.  We want to do 3-4 months of travel, come back for a couple of months and then travel again. We plan to do this for as long as we can so a small place is all that we want. Fingers crossed, we will realise £100k to start our wanderlust.

Nebulous2

We didn't hugely downsize, but moved to a cheaper area, more convenient for elderly relatives. We had planned to spend much more time travelling, but caring responsibilities and Brexit have intruded, and reduced our opportunities. We still managed 10 weeks abroad last year however. 

We looked at downsizing where we were, and couldn't make the figures add up. Moving from a 4 bedroom house to a modern 2 bedroom flat, meant a huge loss of amenity, with possibly £30-50k gain after expenses. We concluded that the compromises needed just weren't worth it. 

Ibrahim5

I retired at 50 so had 17 years to bridge before state pension. If it all went horribly wrong there are lots of 4 bedroom, 2 bathroom properties in our area that are reasonable. That would liberate about £500k cash. That was a worst case scenario.