Residential Property: Future proof – the upsides of downsizing

Jim and Lilian Coffey decided about a year and a half ago to sell the home they’d lived in for 30 years in Killiney, Co Dublin. “We lived in a detached four-bed in Ballinclea Heights, overlooking the bay, and we had lovely neighbours. But the house is up a hill, and we’d always have to have a car to get the newspapers and the milk. That’s fine while we’re still fit, but if anything happens to either of us, it could mean we’d end up in a nursing home. We’d reached an age where the kids had moved out – so we decided to downsize.”

This is the starting point for many people in their mid to late 60s who decide to sell up and move to a smaller home or apartment. Although many homeowners say they want to stay in their own home as they grow old, a sizeable minority want to move somewhere smaller, more secure and easier to manage. Estate agents reckon that between 10 and 20 per cent of their Dublin sales are for people trading down, and the figure might be higher if there were more suitable trade-down properties for sale. (Lisney says about 20 per cent of its vendors so far this year have been people trading down, Sherry FitzGerald estimates 10 per cent and Knight Frank around 15 per cent.)

A recent report for the Housing Agency and Ireland Smart Ageing Exchange (ISAX) – Housing for Older People, Thinking Ahead – found that while the majority of people over 55 were content with the homes they lived in, about 20 per cent found their "ease of living was negatively affected" either by the type of house they lived in or by their location. The report concluded that remaining in the local community, as opposed to the house, was the most important reason for people to stay in their current home.

This suggests that the downsize market could be a lot bigger if suitable properties were available. Many agree that this market is underserved at the moment; agents waiting to sell high-end apartments in Marina Village in Greystones, Co Wicklow and Marianella in Rathgar when they are built (both by mid to end 2017) have taken details from thousands of potential buyers. About 50 to 60 per cent of those interested in Marianella are downsizers, says Knight Frank agent Peter Kenny.

Lisney's David Byrne confirms that the majority of its clients in this market want to trade down in their own area. "Ideally, they're looking for properties that don't need refurbishing. Many are looking for bungalows and a lot say they don't want to live in apartments." But bungalows are hard to find and there is a shortage of  93sq m (1,000sq ft) three-bed apartments that might attract downsizers.

Most important of all for people trading down is a place where they can walk to shops and the bus stop or train station – so there’s a premium paid for small houses centrally located.

Releasing equity

Lisney's Guide to Downsizing Your Home booklet* provides a useful checklist of things people who are thinking of downsizing should consider before they move.

One of the first is whether or not they want to realise equity by downsizing: most people probably do, to provide them with what Sherry FitzGerald's Gordon Lennox – who downsized himself this year – calls "a nest egg for their golden years".

“Most people of my generation’s pensions were decimated in the downturn, so many are trying to realise some equity out of their homes,” says Lennox.

Obviously, the feasibility of this depends on the value of your house, and the cost of what you hope to buy, so getting a realistic valuation early is key.

You should also remember to tell your children your plans: most adult children may be happy you’re moving on, but they’ll have opinions about the loss of the home they grew up in.

The next conundrum is whether to sell before buying or buy before selling: it’s widely agreed that banks will not provide bridging finance to cover if you can’t sell your home quickly after buying. Says Lennox “My bank just laughed at me.” But you may well need cash to rent accommodation if you sell before you buy – and rents are currently very forbidding. There’s also the cost of storing furniture for months to consider.

You will also have to decide if you want to refurbish a downsize property before moving in, or maybe even plan to build a new one. This will require time and energy as well as money. Lennox warns that many refurbishments can go as much as 20 per cent over budget. And Jim Coffey, who successfully renovated his new house, says their single biggest unanticipated expense was VAT at 23 per cent on everything from estate agents to solicitor's fees as well as on building costs. Against this of course is the fact that you don't have to pay any capital gains tax (CGT) on the sale of your house.

Some energetic downsizers build new homes on their own large gardens: this takes determination – even just to get planning permission in the first place – time and money.

Storage and access

You should also of course consider the type of smaller home you want – and architect Fionnuala Rogerson warns that people are likely to need more space than they think. Rogerson, an expert on future-proofing your home, strongly advises thinking carefully about what you will need.

“Older people need a lot more space if they have to use a walking frame or wheelchair; they need to be able to manoeuvre. You need a good deal of storage for equipment, as well as for personal possessions.”

You should have level access so it is easy to get into your new home, and if it is a two-storey house, a downstairs bathroom big enough for a shower, possibly a wetroom.

“If you decide to get a bath, you should have one that’s easy to get in and out of,” she says. And single people should try to have a second bedroom, in the event that they’ll eventually need a carer.

Rogerson also advises buyers to look for apartments that let natural light into all spaces, including the kitchen and bathroom. They should be dual-aspect, that is looking in at least two directions, and should be oriented so that they’ll get sun in some of the rooms for some of the day. “Window levels should be low enough so that you can see out from a seated position on bed or sofa.”

Apartments that have steps leading up to them, or no lifts, aren’t ideal for downsizers. And one woman currently looking at moving into an apartment is disappointed at the lack of good big balconies, especially desirable for people giving up a garden. An advantage of a brand new house or apartment is that it will have proper insulation and much lower fuel bills than most old houses.

In short, you should look to your potential future needs in your new home and assess the adaptations that could/should be made, perhaps weighing them up against adaptations to your existing home. You also have to factor in the cost of annual maintenance charges in an apartment development, balancing them against the cost of running your own home.

Rogerson’s advice on storage is well taken: anyone who has recently downsized will remember the pain of decluttering after years of family life. Jim Coffey warns: “The kids won’t want to take anything – and all the stuff in the attic belongs to them!”

Anne Connolly, chief executive of ISAX, is in no doubt that what’s needed for our rapidly ageing population is a much better mix of housing options for older people. (The number of people aged 80 and over is predicted to rise by 250 per cent between now and 2050.)

Currently, the choice is mainly staying in your own, possibly adapted, house or entering a nursing home for support in later years. At its recent conference on Housing for Older People ISAX – an independent network addressing the needs of an ageing economy – brought together builders, developers, local authorities and social housing providers to discuss everything from individuals buying houses near each other to provide mutual support to "clustered housing" developments where people live independently but have communal facilities, to a state-of-the-art "dementia village" in the Netherlands.  "We're saying there's a huge market for new kinds of housing for older people – what they want is choice."

*lisney.com, under Research, then Resources

Keys to a new life

· Consider your reasons for downsizing – the house might be too big, too expensive to run, inconvenient for shops or difficult to adapt. Perhaps you want to realise some equity to supplement your pension, or would like more security.

· Value your property – check out propertypriceregister.ie, which may give you some idea of selling prices in your area.  Work out how much you’re willing to spend on buying a new home, then start checking out areas you’d like to live in. Do you want a house or apartment, a garden, proximity to children, friends, shops, public transport.

· Decide to sell before buying or to buy before selling. Banks rarely provide bridging finance if you buy first; remember you may well have to find somewhere to rent if you sell first while waiting to buy/refurbish a new property/ build a new home.

· Future proof your new home, or ensure it can be adapted – fit 60-somethings are often in denial about the possibility that their mobility may be diminished in a decade or two.