Tuesday, June 24, 2014

Downsizing options

There are, apparently millions of households looking to downsize (half of those currently looking to move) making it a very high priority to find out why this step is proving so difficult. Clearly, the shortage of suitable smaller dwellings (particularly if a larger garden is required) must be one of the first hurdles. However, until we decouple the enjoyment of the dwelling as living space with that of a private pension pot, priority should be given to addressing the question of what the downsizing household could sensibly do with the equity released from the sale of a larger property. Those supporting co-housing would respond with the possibility of the homeowner buying a new (and smaller) dwelling for their own use with the possibility of buying a 2nd dwelling on the same development for rent (and possible gradual purchase of equity) by another small household - possibly of a younger generation. If the cohousing scheme has some form of mutual ownership or trust then all the downsider's equity could be put into that entity and they could feel secure that it is related to some property asset. However, the option for those for whom cohousing is either an unattractive alternative or, and equally likely, currently unavailable, the obvious option is currently buy-to-let. For those who sense that this is an inequitable and ultimately unsustainable trend, there should be an exploration of some form of property bond into which equity released from the sale of a large property could be invested. That bond could be used to develop property within or outside the local area. In conversation with an advocate of community land trusts the possibility emerged of an investment of such spare equity into a trust of that nature, the advantage of which would again be the security of investment in the property market. Of course, the recent surge in property prices (at least in some regions)might indeed be a bubble, but while residential property appears to be the best investment for those concerned about their pension pot the community land trust alternative might be worth exploring. Finding a secure investment for the equity released from the sale of a larger house would be a very important step in the decoupling of the enjoyment of a dwelling, that could and should be of a much more suitable size, from the need to hang on to a dwelling simply to maximise or at least maintain one's pension. Incidentally, the case for cohousing was recently enhanced by Linda Grant in her writing on the killing of her library. Would it not be much more sensible for collections of books to be shared and for the original owners to introduce them to the new audience comprised in their new neighbours? What goes for books should also go for tools, decorative items, cars, pets and skills... it is also conceivable that the showing of outdoor space could overcome the current problem where smaller dwellings imply smaller gardens which is exactly what many downsizers find unattractive. Coming back to the problems of finding suitable housing (Including larger gardens), this is a matter for planners to ensure that new developments are almost exclusively of 2 and exceptionally 3 bedrooms (look at Rightmove to see how many larger dwellings are already on the market).


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