At some point, your house is going to feel too big for you. So should you sell up and move somewhere smaller? Is it worth it, or is it more trouble than its worth?
Freeing up capital is the most vaunted reason to downsize, and giving yourself a tasty bundle of tax free cash. So how much will it give you?
Assuming you want to stay in the same postcode*, Project 60 sampled the houses for sale on myhome.ie in a single postcode – D18 – and compared 4-bed, 3-bed and 2-bed house prices. The idea was that if you live in a 4-bed now you would move to a 2 bed to effectively downsize. The snag with that was although there were 67 4-beds for sale, there were only 8 2-beds. So problem number 1, your choice may be very limited.
The average price in Dublin 0f a 4-bed was €759k. A 3-bed was €554k, a 2-bed was €337k. So if you could find a 2-bed you would on average free up €422k. Dropping only 1 bedroom would put €205k in your wallet. Deduct the costs of moving – 1% stamp duty on what you buy,plus 1% estate agent on what you sell, plus surveys, conveyancing and a man with a van – say around €20 to 30k. Hence your free cash becomes approximately €400k for properly downsizing, or €190k for downsizing a bit. Given all the averaging, lets say €300k.
With that in your back pocket, your running costs should also fall. You may already be employing someone to give you a dig out in the garden, someone to clean the gaff, someone to fix the plumbing, boiler, lights, roof, windows. Maybe you do it all yourself, but assuming eventually you won’t be able, lets say you could reduce your maintenance costs by €2-3k per year.
Should you downsize into a nice new place with top rated BER and efficient heating, your utility costs could reduce by €3.5k per annum, (based on moving from 200 sq.m at BER D to 100 sq.m BER A).
So €300k in you sky rocket, and €6k a year reduced running costs.
I don’t think I’m ready to tackle the attic just yet, but you go on ahead and let us know how you get on.
*Dublin has 22 postcodes and around 1.2 million people, so D18 comprises around 20,000 homes