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spyguy

Down Sizing Is Not A Pension Plan

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It's so generalised to have no meaning for me. I don't think it's about someone in their 30s buying/upsizing now, for long-term future with downsize plan, but more for middle-aged homeowners now. It's automatically assumed that few have little equity, when they do.

It has nothing about the age-groups. Many of us have expected more downsizers from the 50+ age group (with equity), as partial trigger for hpc. (Markets move at margin).

Also you can't get many outright owners to downsize in this market. Mad-gainz not enough to tempt them out, and some run the numbers and don't see enough profit.

Anyway for many renter-savers, ideas of outright houses downsized with load of extra £10Ks/£100Ks to put into savings in totally out there, but no mention of us.

Aside from reducing IHT liability, it doesn't make much sense to downsize.

Moving from a £1million property to a £600K property costs £24K Stamp duty, £12K Estate agent fees (assuming 1% +VAT) and probably another £4K in various other costs. So that is £40K off the £400K "profit".

It is expensive to downsize. Moving down incurs all the moving costs associated with moving up. Selling a £1m property to move into a £600K property will cost over £40K when all fees and taxes are considered. In effect you lose 10% of the potential gain. I don't believe people are refusing to downsize, it's just that they lack any incentive to do so.

Lo-fi, on 08 May 2014 - 07:27 AM, said:
Turning down the possibility of £400k equity gains for the sake of £40k fees is either extremely poor maths or somewhat disingenuous (i.e. the fees aren't really the main issue). There are no doubt many legitimate reasons not to move, but that's not one of them.

My in-laws are a bit like that. It would cost them a wedge to downsize from their massive, well located 5 bed house to a massive garden and all they can find to downsize to is s*** with no gardens miles from any services....so they are staying put.

I must try the line "sell before you miss out" on them the next time I see them.

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True.

Again, I come from the future - Scarborough.

Large mismatch between older people selling and younger people buying.

Imnot giving it away is written on the coffin as they are carried out.

Probates piling up.

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"Only" £113k of free money. That's over 5 years' take-home pay for one of the UK's millions upon millions of £25k bludgers. The average working age family would struggle to save a sum like that in 15 years of continuous employment.

People have really lost sight of the amount of money that an ordinary person is likely to get their hands on in a lifetime.

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And thats assuming the mortgage is repaid rather than being IO.

I know people who paid <70k about 20 years ago for a new-build home that is now valued at >£250k who are in -ve equity to the tune of >40k, and that with a combined income of ~100k. That takes considerable financial planning. I am sure they are not alone and they are probably one of the reasons I get 1% on my savings.

Edited by LiveinHope

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I know people who paid <70k about 20 years ago for a new-build home that is now valued at >£250k who are in -ve equity to the tune of >40k, and that with a combined income of ~100k. That takes considerable financial planning. I am sure they are not alone and they are probably one of the reasons I get 1% on my savings.

Thatll be saving glut i keep hearing about.

Be like government surpluses.

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Looking at the example given by arrgee1991 of downsizing from £1m to £600,000, I don't think the costs of £40,000 are too bad.

1) If prices subsequently drop 10%, your new house has dropped from 600 to 540, whereas the old one has dropped from 1000 to 900 - the value has fallen by £40,000 less compared with staying in the original house.

2) You now have an extra £360,000. I doubt you could get this much from equity release. And having no strings attached probably makes it preferable too.

£40,000 is just over 11% of £360,000. A fairly sensible portfolio could earn 11% in a relatively short period.

3) There will probably lower expenses after downsizing. Lower bills, less maintenance and less risk. Perhaps lower council tax.

Downsizing with these costs is sensible if prices are stagnant. Downsizing with even higher costs would be sensible with even higher costs if there is a real crash.

Many people just find it painful to pay money when it can be avoided. They can bear the prospect of future paper losses, but cannot stomach paying taxes, or dead money to landlords etc.

The fact that people are finding it so hard to downsize (in Scarborough for example) just shows how imperative it is for those able to do it now.

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For crying out loud Venger , is it even possible for you to post anything without using the term "RENTER SAVERS", really is starting to bore the pants off me.

No, because the media tilt is all about the homeowner side of things. They even turn landlordism itself into being caused by 'rental demand', rather than BTLers outbidding would-be-homeowners for homes.

Even here, scoffing at downsizing to boost ones position (something renter-savers can't do), cashing in equity... banking some good gainz/mad-gainz in the downsize, as 'most people doing so would experience a slump in living standards on retirement'. When so much of it depends on individual circumstances.

I skip over a lot of your positions too. 20-30 years unbroken work... it's called savings for the future, and also being informed to what life means if you have no income. What do you want the system changed to.... £500 per week unemployment benefit? Also in many instances they could sell their house and downsize, or move somewhere cheaper. I recall a few people on forum in position you set out, after job loss, unwilling to move from their zone1 high-equity 3 bed apartment.

...I have seen endless people who after 20 or 30 years or more of unbroken work finally walking into the welfare office as a last resort and after a lifetime paying into it completely lost and overlooked and more often than not abandoned because they never knew how the present day system worked, why should they as non users of the system, only to end up fighting to get back to work after illness or whatever adversity they hit, bitter for the rest of their lives of a system they actually pain into 100 fold or more that failed them for the short time they needed it.

Seems to me you've only really ever known homeownership since your early 20s, upsizing into the 90s HPC, and finally selling out into a toppy-market, with loads of equity in a divorce.

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They talk about an income of £13.5k a year being a disaster to retire on when it is easily enough for anyone without housing costs.

Saying that,most people i know have all MEWed their houses they bought for £30k up to £80k,and are in negative equity in their late 40s when they should of been mortgage free years ago.Still they have the photo of the kids with a man in a mickey mouse costume,"memories","We going to save once kids leave home innit "(early 50s to retire at 60,full mortgage still,no history of saving anything).

The jaws hit the floor when i explain £30k saved will get them about £30 a week and they better prepare to work until 67 minimum.

The only thing to downsize into would be a box under the railway bridge.

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They talk about an income of £13.5k a year being a disaster to retire on when it is easily enough for anyone without housing costs.

Saying that,most people i know have all MEWed their houses they bought for £30k up to £80k,and are in negative equity in their late 40s when they should of been mortgage free years ago.Still they have the photo of the kids with a man in a mickey mouse costume,"memories","We going to save once kids leave home innit "(early 50s to retire at 60,full mortgage still,no history of saving anything).

The jaws hit the floor when i explain £30k saved will get them about £30 a week and they better prepare to work until 67 minimum.

The only thing to downsize into would be a box under the railway bridge.

Nail on head post, most homeowners seem to expect their house to be holiday fund as well as pension fund. Doesn't work like that, it might manage one, but definitely not two.

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They talk about an income of £13.5k a year being a disaster to retire on when it is easily enough for anyone without housing costs.

Saying that,most people i know have all MEWed their houses they bought for £30k up to £80k,and are in negative equity in their late 40s when they should of been mortgage free years ago.Still they have the photo of the kids with a man in a mickey mouse costume,"memories","We going to save once kids leave home innit "(early 50s to retire at 60,full mortgage still,no history of saving anything).

The jaws hit the floor when i explain £30k saved will get them about £30 a week and they better prepare to work until 67 minimum.

The only thing to downsize into would be a box under the railway bridge.

As soon as the kids leave,the tax credits stop.

Theyll have an extra ~1K/month to find.

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Without housing costs, my £8k pa pension is easily enough. The bus pass helps, as does making my own booze.

Been hearing twaddle about 'poor pensioners' since I was a teenager. Yeah right.

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Without housing costs, my £8k pa pension is easily enough. The bus pass helps, as does making my own booze.

Been hearing twaddle about 'poor pensioners' since I was a teenager. Yeah right.

They were until Gorddy decided to stuff the mouths full of money. Vote for me, he cried! And they didnt.

The poorest pensioners are in their 30s and 40s now.

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I save 12.5% of my salary into a pension every year. I am 31 and have a decent pot already and the forecasts for low medium and high returns look more than sufficient.

However I am sure there will be a citizens income by the time I retire and the world will be a very different place. Automation and citizens income will change the world. How this factors into pensions, debt and house prices I'm not sure. My pension may be redundant but I'd rather err on the side of caution and save as much as I can. I've always been a saver so no change of lifestyle required.

However the anecdotes above by a few posters have me confused. The past is not a good indicator of the future. We live in different times. The couple with their memories of Mickey and the gang may be the smart ones enjoying their lives and living for the moment. Nuclear fusion, stem cell food, automation, debt jubilee, helicopter money. Who knows what the future holds.

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These are the options......renter/ live with mum and dad savers, renter/ live with mum and dad inheritors, help from BOMD or other similar charity. ;)

For crying out loud Venger , is it even possible for you to post anything without using the term "RENTER SAVERS", really is starting to bore the pants off me.

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They talk about an income of £13.5k a year being a disaster to retire on when it is easily enough for anyone without housing costs.

Saying that,most people i know have all MEWed their houses they bought for £30k up to £80k,and are in negative equity in their late 40s when they should of been mortgage free years ago.Still they have the photo of the kids with a man in a mickey mouse costume,"memories","We going to save once kids leave home innit "(early 50s to retire at 60,full mortgage still,no history of saving anything).

The jaws hit the floor when i explain £30k saved will get them about £30 a week and they better prepare to work until 67 minimum.

The only thing to downsize into would be a box under the railway bridge.

£13.5k index linked per year, with a state pension some point in the unknown future two people could manage on if debt free/ regular finance payments free.......so, say twenty five years of life left, it would require one big savings pot, more than most would have, down sized or not..... ;)

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I save 12.5% of my salary into a pension every year. I am 31 and have a decent pot already and the forecasts for low medium and high returns look more than sufficient.

However I am sure there will be a citizens income by the time I retire and the world will be a very different place. Automation and citizens income will change the world. How this factors into pensions, debt and house prices I'm not sure. My pension may be redundant but I'd rather err on the side of caution and save as much as I can. I've always been a saver so no change of lifestyle required.

However the anecdotes above by a few posters have me confused. The past is not a good indicator of the future. We live in different times. The couple with their memories of Mickey and the gang may be the smart ones enjoying their lives and living for the moment. Nuclear fusion, stem cell food, automation, debt jubilee, helicopter money. Who knows what the future holds.

I put double that away every month to cover the fact that ever since I started paying in to schemes other that the first Superannuation one I was in the forcast returns for the level of payment required have continued to deteriorate. The worst thing you can do is base any forcast on the present an be optimistic.

I imagine that the powers that be would favour mass extermination of the plebs as soon as they are surplus to requirements hence you can dream on about debt jubilees, helicopter money and citizens income.

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These are the options......renter/ live with mum and dad savers, renter/ live with mum and dad inheritors, help from BOMD or other similar charity. ;)

Options and choices - and not all those choices are available to everyone - same as the 'sofa-surfing' solution some hpcers have suggested. Totally unrealistic to those of us with children of our own.

Renter-savers don't empower BTL/Landlords - we have to have homes and in many instances BTLers outbid us for those homes.

Buying is an active market choice, as it owning and refusing to cash in on HPI, and refusing to downsize. All in the market.

If older owners don't want to downsize to cash in gains that is fine. Providing that they don't then begin complaining if the value of their homes fall, or start with GS's position that they didn't know Government didn't shower them with money, in event of income loss after 20-30 years of work. (It's called having savings and being prepared).

More downsizers coming to market would help a bit with market discovery and help set things in motion, so I do want to see it, but there are other triggers for hpc including 3% stamp duty hike on BTLer buying and S24.

On hpc I'm going to stick up for the renter-saver side, against what I see as a wider house price bubble (others don't see it that way - transactions being set each day at high prices). If it annoys the newish member who has just joined, buying a house in his early 20s, upsizing into 90s HPC, and finally selling up a while ago, so be it - but no way going to comply with demand I stop posting about renter-savers. Make a post on the subject if you have any opinion GS, rather than just using it as another attempt to silence me.

I have come to accept GS won't back down from his position of wanting to make it so much about 'sympathy and suffering' for homeowners in any future hpc - seem to me many of those owners sat on big gains and refuse to downsize now - but no way am I going to comply with his post to stop posting about the renter-saver side of things.

Anyway, if it now stops you ranting at me all well and good.

I think that people should be a damn sight more careful about labelling other poster's posting as ranting. You're some low post count nobody with as best as I can see nothing original to say, bringing nothing to the party and therefore you haven't really earned the right to use such openly dismissive and belittling language. If you disagree with another poster, make the argument. If you can't be bothered, add them to the list of posters you ignore.

If someone accuses me of ranting then I'll tend to roll with the punches and then set about carving them a new @rsehole one put down at a time over the following months. Venger is a better man than me and continues to engage with you constructively.

This is what free speech is about - other people have a right to their opinion - if you don't like that opinion then ignore them.

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Downsizing from a small three bed or two bed to a one bed flat would not benefit older people unless they can't manage to run the place......far too many people still have boomerang kids who come and go or stay.....to be honest the drop in value of their home is not something the oldies tend to worry about, the money is well and truly tied up, it is their kids that have a bigger interest in the value. Anyway old people tend to get set in their ways and dislike change once they reach a certain age.....their community and surrounding support network is worth much more to them. ;)

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Downsizing from a small three bed or two bed to a one bed flat would not benefit older people unless they can't manage to run the place......far too many people still have boomerang kids who come and go or stay.....to be honest the drop in value of their home is not something the oldies tend to worry about, the money is well and truly tied up, it is their kids that have a bigger interest in the value. Anyway old people tend to get set in their ways and dislike change once they reach a certain age.....their community and surrounding support network is worth much more to them. ;)

It's a market. If they don't want to downsize that is fine. Market choices.

Surely easier to run 1 bed place in most instances.... if they're going to struggle with that, how do they manage with 3 bed?

Simply know this; renter-savers exist and have to put up with many compromises too. Some owners may see it not worth downsizing to back £100K and buy flat outright with the proceeds. Own choices. Same as a family I know who upsized to 5 bed a while ago, justifying it by fact their adult kids, renting and saving 100 miles away with children of their own (who all want HPC in the here and now - not share of house in other area in 20 years time) , can stay over at Christmas.

I didn't realise this inflatable bed (£8) I bought last week (for friend saying over) didn't have a fitting for my car-tyre compressor. Tesco sells its own special electric pump for the fitting (£10). Got it inflated old fashioned way.. well I did part of it, and someone else other part. Renter savers exist.

Jm8pmPuB.jpg

What annoys many people is rachman - like many in London - are literally lottery winners. (Being given £1-1.5 million pounds fir nothing can most definitely be classed as a lottery win)

And are not even cashing it in !!

There is also the belief that they are somehow deserving of it - which is ********.

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http://www.bbc.co.uk/news/business-36804906

True. And this is with very high house prices.

Wait til the demographics kick in. 5 years the number of working age people starts dropping.

In a report for the insurance company Royal London, he said most people doing so would experience a slump in living standards on retirement.

They missed a bit..

"The UK's largest mutual life insurance and pensions company" http://www.royallondon.com/

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It's a market. If they don't want to downsize that is fine. Market choices.

Surely easier to run 1 bed place in most instances.... if they're going to struggle with that, how do they manage with 3 bed?

Simply know this; renter-savers exist and have to put up with many compromises too. Some owners may see it not worth downsizing to back £100K and buy flat outright with the proceeds. Own choices. Same as a family I know who upsized to 5 bed a while ago, justifying it by fact their adult kids, renting and saving 100 miles away with children of their own (who all want HPC in the here and now - not share of house in other area in 20 years time) , can stay over at Christmas.

I didn't realise this inflatable bed (£8) I bought last week (for friend saying over) didn't have a fitting for my car-tyre compressor. Tesco sells its own special electric pump for the fitting (£10). Got it inflated old fashioned way.. well I did part of it, and someone else other part. Renter savers exist.

Jm8pmPuB.jpg

Markets do mean choices, most money is made from those with few choices......love the lie-low, other week picked up a blue and red rubberised one for £1 as found, thankfully no air escaped and very comfy indeed.......taxes, upheaval and moving costs are high, sometimes individual circumstances force decisions onto people.

I would say a first home has been a short-term rental home where rent was such that with credit interest a healthy deposit could have been saved in ~two years to purchase first mortgaged home, also should be firmly settled into a career by then.....

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Markets do mean choices, most money is made from those with few choices......love the lie-low, other week picked up a blue and red rubberised one for £1 as found, thankfully no air escaped and very comfy indeed.......taxes, upheaval and moving costs are high, sometimes individual circumstances force decisions onto people.

I would say a first home has been a short-term rental home where rent was such that with credit interest a healthy deposit could have been saved in ~two years to purchase first mortgaged home, also should be firmly settled into a career by then.....

Yet choices in the BBC article means snubbing gains from downsizing - such a massive generalisation in that article.

Saving For a Spaceship (well noted btw re pension company). "In a report for the insurance company Royal London, he said most people doing so would experience a slump in living standards on retirement." (BBC) - most people/owners? Try it from renter-saver side. No HPI to cash in at all. Just HPI++++++ higher prices vs renting, to date.

No argument with the first part Winkie. However too few older owners want to sell up (which is fine). Just don't have them complaining about lack of money in future, or if their homes fall in value in a HPC (non-sellers-regret). They have no position to complain. Can't have it each and every way.

However the second part..... house prices around here. Quarter million pound 2-bed terraces. Yes renter-savers also have option to move to Blackpool or inner-Stockport, but perhaps want more than £120K house/terrace there - it's that value for a reason, and also vs incomes, still high prices.

And also this..... so few reasons to downsize and cash in on gains/mad-gainz, and BTL party zone, in a HPI bubble. I've got my deposit the way you outline (and far longer on renter-side), but no way am I going to take on rest of the debt, and put my deposit down (hard-earned) into houses at these prices. S.24, 3% SDLT hike BTLers.... some downsizers eventually (bringing down value of higher end homeowners who refused to downsize and snubbed mad-gains) = HPC.

10wvaep.jpg

Edited by Venger

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How long anyone stays renting saving would largely depend on what rent is they pay and where they choose to live......today I would guess and I have come across people whose first property is a BTL property....either purchased by their parents for them later or purchased by them whilst they hang out in cheap rental including relatives/friends spare empty rooms. ;)

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