Selling off the family home not a decision older people should rush

Ireland's transition from the youngest country in Europe to one with a greying population has come about quietly. In 1996, we had 315,000 over 65s, according to that year's census figures. By the year 2011, that figure will have risen by 26 per cent to over 521,000.

This demographic change has important implications for the property market.

Nine out 10 older people today are living not in hospitals or nursing homes, but in the community. Many are living in the same house they bought as a newly married couple. Most of these large, solid homes have now grown too large for their needs, and today their value has soared to dizzy heights.

The roomy proportions, four-plus bedrooms, garages and large gardens which were standard in many detached and semi-detached homes built in the 1940s through to the 1960s are eagerly sought after today.

In theory it seems to make good sense for an older couple to sell up for something smaller, and make a tidy profit in the process. It may seem a particularly attractive option for those whose pension is small and want a nest egg for old age. But are pastures new the best idea? What are the pros and cons?

The first pieces of advice from the professionals is to take your time: "One overriding consideration is not to sell too soon after a bereavement unless there is a security risk or a home management issue," says Gordon Lennox, managing director of Jackson Stops & McCabe, Bray. "I would advise people to wait six months and do nothing hastily.

"Secondly, it's far better to make the decision to move when you are still in control of the situation rather than having it made for you - so there may still be a sense of adventure, even through gritted teeth. When people have their mental faculties, you can't insult and flannel them. I've known situations where people have been moved against their will, and a lot of hurt is caused in the process. If it's a question that the family is worried about a couple or individual living alone, there may be scope first in checking what supportive local facilities exist - such as meals-on-wheels or a day respite centre," he says. When you retire, your home is the focus of your life more than ever, so the choice of where you live and the amenities on your doorstep gain in significance. Unless you stay in the area, you are moving away from the familiar, from friends, neighbours, shops, church and facilities. So couples must strike a balance between the trauma of moving and saying goodbye to the place where so much of their personal lives has been invested - and paying attention to their financial, home and garden management needs.

Buying locally at a profit probably means buying smaller, which in turn could mean parting with some well-loved pieces of furniture. But if trading down to something small, how small? Many people may still want a garage or workshop, a back garden which offers privacy, perhaps space for a study or office. Martin O'Mahony of O'Mahony Auctioneers, Goatstown, says whether or not an older couple will sell at a profit depends crucially on what they have to sell, and and what they want to buy. "I'm thinking of a couple who had a large five-bedroom detached house and they wanted to trade down to something more manageable. Their own house sold for £460,000 which sounds brilliant. They bought a new house, and then added all kinds of extras. In the end they only broke even. You really need to go into how much it actually costs to move house, get out the pen and paper to make sure it makes good financial sense.

"You can fall into that trap when the family starts getting involved - `Mum, you must have this', `that isn't good enough'; you can be encouraged to spend money."

Moving house costs money. A lot of the profit made from changing from a bigger to a smaller place could be swallowed up with legal costs, auctioneering fees, advertising, stamp duty, removal charges, redecoration, refurbishment and furnishings.

Secondly, the house of your dreams may not be available. "I'm approached constantly by couples wanting to sell their big old house and move into a bungalow," says O'Mahony. "Half of south Dublin wants to move into a bungalow. This means that a bungalow that should sell for £300,000 is pushed up by as much as another £100,000 because of consumer demand. Many old bungalows are in need of rewiring and refurbishing; it can be a real money pit."

The ideal situation is when a couple are selling up and moving out of Dublin. "I had a couple who wanted to move to Carlow to be near their children. They got over £300,000 for their house in Dublin, and paid £100,000 for a detached house on half an acre in Carlow." It appears that the problems for first-time buyers are reverberating throughout the family, and affecting the options of older couples. Several estate agents talk of middle-aged parents re-mortgaging their homes to help a son or a daughter to buy a starter home, thereby saddling themselves with repayments at this late stage of their lives. A recent report suggested that 5 per cent of all first-time buyer sales are now assisted by parents.

Other parents hold on to provide for the families long term. Daphne Kaye, an auctioneer based in Foxrock village says. "It's not unusual to find people living in poor circumstances in large old houses; all the assets are in the house," she says. "They want to present something to the children, so they hold on to the house.

"Couples vary. Some find moving very stressful, others rise to the challenge, embrace the adventure and have a new start. They need good advice and support. They should have the value of their home assessed, discuss what they want, see if it's available and what it would cost." The cost of the new can also be an unwelcome shock. "When a couple have not bought or sold a house in 40 years, it is hard for them to appreciate that something much smaller in the same area may have what in their eyes is a disproportionate value. For example, you could sell your home for £500,000 but find you would have to pay £400,000 for a bungalow, townhouse or apartment in the same area."

There are new initiatives for families to find out about and discuss. One is the building of clusters of homes for active retired people, with a positive discrimination for older people as tenants. Daphne Kaye is involved in the early stages of such a development. She says it's the coming thing - going some way towards the retirement village idea, with people remaining as part of the community.

Another option gaining in popularity is sale and lease back, where older people sell their home, but remain living in it during their lifetime paying an economic rent. Typically, this kind of deal has to be handled very discreetly: "It can be complicated to put together," says Kaye: "People don't like to let neighbours know, and the landlord needs to be sensitive. There needs to be an agreement about repairs and management." A third option is to sell the house and land while retaining a section of a large garden in order to build a smaller home with own entrance. The Irish Times has come across two such trading down solutions within the past month. In the first, a married couple are selling their large home, and building a bungalow in a part of the garden they have excluded from the sale. In the second, a widow in her eighties who wants a smaller home in a well-loved and familiar town is also building a bungalow in a corner of her own land, while selling off the remainder.

"Older people possess a lot of wisdom, and money isn't everything to them." says Ross McParland: "With wisdom comes caution, so they are inclined to take their time. I would say our agency is not alone in being called to the same family home several times over a decade to discuss a possible sale. Selling up is a big topic of conversation in families, something some families talk about, but never do!"

A trend he is noticing, however, is when an affluent couple plan ahead and buy a smaller home or apartment for their retirement as much as 10 years in advance, rent it out in the meantime, the rental going some way towards servicing the mortgage. "This option gives a couple a chance to buy their new home together," he says. "They may or may not move into it in the end, but they have endless pleasure from the planning, and what they get, above all, when they think about the future is peace of mind."

Finally, another novel idea to solve the problem of the old folks was introduced in Radio 4's serial The Archers. Older couple Jill and Phil live in the Big House and can't cope with stairs and housekeeping because Jill has injured her leg. Their son and family live in a small bungalow on the farm. Their solution for the duration of Jill's indisposition is to swap homes.

It could be a runner.