After years spent maintaining a family home, the prospect of downsizing to somewhere smaller, warmer and easier to manage can seem like a sensible next step. It might even release some much-needed equity for retirement, travel or to help the next generation get on to the property ladder.
Yet the prospect of downsizing can seem considerably more straightforward than the reality. For all the talk of older homeowners freeing up family-sized houses, finding a suitable smaller property in the right location is not guaranteed. The finances, meanwhile, are not always as compelling as they first appear, once stamp duty, legal fees, moving costs and the price of a well-located apartment or bungalow are factored in.
Guy Doherty of Sherry FitzGerald is an estate agent in north county Dublin and he comes in contact with many people who are in a house that is too large for their needs. While he would always recommend looking into “rightsizing” for the next phase of life, he can’t guarantee the process will always be smooth.
“I’ve huge empathy with people who are trying to downsize because it’s very hard,” says Doherty. “The main rationale for downsizing is to get a home at a more manageable size. There’s also the desire to get closer to family and facilities, so it makes an awful lot of sense.”
RM Block
However, in Doherty’s experience, the logistics of lining up the sale of the old home and the purchase of the new home can often become too complicated and has resulted in people changing their mind and taking their home off the market.
“Selling your house and trying to find your perfect downsizer property, and dovetailing the two, is incredibly hard. I find with downsizers that element of risk is too high.”
Apartment living
It is also difficult for homeowners to shift their mindset to apartment living.
“Apartments probably had a stigma and the idea of downsizing to one might be just too much of a move, particularly if they enjoyed their garden and have to settle for just a balcony,” says Doherty.
“But, having said that, I’ve seen it happen and the benefits are huge. If I can get clients to come see the apartments and see how easy apartment living is, they can get their heads around it. There might be management fees, but when you break it down, it means everything is looked after and there’s no maintenance to worry about.”
Doherty is an advocate for looking at different models of housing for downsizers and feels Ireland is way behind the curve on this. He believes there should be tax incentives to encourage developers to create a more appealing option for downsizers and look at building Florida-style community schemes rather than expecting the older generation to move into an apartment block alongside first-time buyers.
Incentivising this cohort of buyers would also keep the property chain moving.
“There’s the whole circle of life where a lot of families are trying to trade up to these properties but because the older generation in these homes have nowhere to downsize to, that whole circle is incomplete,” Doherty says.
He points out that even small properties in affluent areas, such as Howth, can command prohibitive prices, meaning the equity prospective downsizers had hoped to release to fund a comfortable retirement may be less than anticipated.
However, staying put is not without its costs. An older home with a poor energy rating can prove an ongoing drain on finances, unless owners have the savings to undertake a full retrofit. In some cases, therefore, moving to a more modern, energy-efficient property – even at a higher price than expected – may prove the more prudent option in the long run.
Planning
Despite these challenges, Doherty believes if you plan early and make yourself familiar with the market you want to buy into, the move is very doable.
“Speak to your local estate agent and get the lowdown on the area. Describe what type of property you’re selling and what type of property you’d like to move to. From there, we can build on that,” he says.
“We probably already have a string of buyers that would love to trade up to your house, and then we can get you out looking at properties that we think would suit your criteria.”
There are also some things prospective buyers can prepare in advance so they will be ready when they decide to move.
A Ber certificate lasts for 10 years and can be done by an assessor, while it is also possible to get your photos and brochure done by your chosen estate agent without having to commit to putting your home on the market. If you’re sitting and waiting for your dream home, this way you are effectively market ready and could get your house up in 24 hours and be in contention to bid on the property you are after, according to Doherty.
“There will be competition at this level of the market because you’re coming up against first-time buyers and cash buyers,” he says.
“There is a safety net in doing it this way because if you don’t get that property, you don’t have to sell. You can reassess and take the property off the market. No harm, no foul – you don’t owe us any fees. But if you procrastinate, it’s already too late.”
[ What will €315,000 buy by the water in Clontarf and Co Kerry?Opens in new window ]
Finance
Financial planning is also an important step. A bridging loan may be required if the timing of the sale and purchase don’t line up. Bank of Ireland has a trade-down equity-release scheme for downsizers that allows owners to borrow up to 60 per cent of their current home’s value to buy a new home. This gives borrowers 12 months to complete the sale of their home and use the funds from the sale to repay the loan with a variable interest rate of 7 per cent.
Legal issues can cause problems at the late stage of any property transaction. William Donovan, a conveyancing solicitor and property law expert at HOMS Assist, says it is always advisable to contact your solicitor as early as possible.
“We need certificates of compliance with planning permission or building regulations, or certificates of exempt development, where a property did not require planning permission,” he says.
“It may be necessary to apply for retention permission which could take six months to a year to obtain. It also takes time to take up title deeds from a bank, where there is a mortgage, or if the title deeds may have gone missing at home. We can reconstitute the title if contacted in a timely manner.”
Donovan says that in some circumstances properties may need an architect or engineer to ensure the physical boundaries correspond with the title map, adding that some houses outside of the city may be met with other setbacks.
“An issue that sometimes arises in the country is that the percolation area servicing the septic tank or a water well may be located on adjoining lands. It may be necessary to have the neighbouring owner sign a Deed of Wayleave or a Right of Way to regularise matters and to facilitate the sale without the purchaser having to qualify the title to the bank.”
It may seem daunting, but with the right planning, there is no reason why you can’t downsize successfully, according to Doherty.
“Sometimes you just have to take a leap of faith. I wouldn’t advise leaving it too late, however. Do it when you have the energy and motivation.”
