Downsize.

Downsize, I'm not overly fond of the word but I'll go with it. I've spent a fair amount of time over the last few months working in this space so thought I'd share some of what I've been up to.

Downsize in the context of this post refers to someone selling their existing home (possibly the family home that you have occupied for many, many years) with a view to purchasing a smaller home. The top definition that comes up when you do a quick Google search says "make (something) smaller" - in this context it's the home that is being made smaller.

Whilst the home gets smaller by downsizing, much more often that not I'm seeing clients living much bigger, fuller, happier lives after doing so.

So what are they doing?

Well it all starts with a decision to sell the existing home. Clients come to this decision for a variety of reasons, but the more common reasons I come across are:

• The existing home is just too big now that the kids have grown up and moved out
• The existing home is getting towards a condition where it needs some renovating, maybe a new bathroom & kitchen. Then the conversation turns to, do I really want to spend tens of thousands of dollars updating my existing home when I could just put that towards a brand new home?
• I want to spend more time travelling. Whether it's spending 6 months of the year away in your caravan, going on a cruise or extended travel overseas - a home where you can just lock the front door and go is possibly more practical than what you have now. Which leads into...
• I'm sick of maintaining the garden. No matter what the initial reason for considering a downsize, the majority of the time a lower maintenance garden is on the wish list. It frees up more time for other activities and means you don't have to spend weeks fixing it up when you come back from that extended holiday
• Freeing up capital built up in the family home (following many years of property price growth) to allow more money for leisure activities or perhaps helping family members buy their own properties

Once the decision to sell has been made some (read, a lot) of consideration needs to be given to where you are moving to.

I've seen clients move to a variety of different homes over the years, some have moved closer to the city, some have moved further from the city, some have moved into townhouses, some have moved into apartments, some have moved to sunny Queensland - they literally have moved all over the place.

Also, some have moved into retirement villages or retirement communities - it's in this space where I have been spending a lot of time over the last few months. More on this later.

What to consider when choosing a new home?

There are many helpful articles on the internet for this but some of the top things to consider when moving to a new home are:

• Location near family & friends or things of interest to you
• Location near or access to, essential services like shops, public transport & doctors
• Consider single level homes, in case climbing stairs becomes a problem in the future
• Consider an extra room to act as a study/ reading room / guestroom
• Are their body corporate fees or lease fees etc. to be paid on an annual basis & do I have the means to cover them

What have I been doing?

As I said earlier I've spent a lot of time over the last few months in the retirement village or retirement community space. I've presented a number of times, to many people in the last few months in this space.

The thing I'll say from the outset is that no two retirement villages or communities are the same. They aren't the same in terms of their facilities but they also aren't the same terms of the financial commitment required of you either. You really need to do your research.

The first thing you'll likely ask is what does it cost to buy the home. You'll also need to find out what annual commitment is required from you for maintenance of the facility, lease payments etc.

One thing often overlooked is what happens when you leave (either decide to sell or pass away and your estate sells up). This is where some huge costs can come in. Often when you leave the home needs to be 'refurbished' (new carpets, maybe new kitchen etc.) who pays for this? Is there some type of deferred management fee payable on exit (often this is some percentage of the sale price multiplied by the number of years you have lived there)? All of this can quickly add up to many tens of thousands of dollars, maybe even $100,000 or more, eating into what you thought may have been the sale price. All fine if you knew about it but can be a rude shock if you didn't.

As I mentioned not all places have the same financial commitment so not all have the same way of calculating the exit fees and some don't charge them at all! You need to do your homework.

I've spent a lot of time helping people going through this understand what Government benefits are available to them to make the move a little easier:

• There's stamp duty concessions available to holders of some Concession or Health Care Cards. The State Revenue Office of Victoria has this on their website under the heading "Pensioner duty exemption or concession" but it's not just pensioners who qualify. You can qualify on a Health Care Card. So you need to get your affairs in order to qualify for a card - it can save you tens of thousands of dollars in stamp duty
• Residents of some retirement villages or retirement communities can also qualify for Rent Assistance. You need to know who to ask & what questions to ask but it can (depending on the annual fees you pay) amount to an additional payment from Centrelink of many thousands of dollars per annum

Then from there it's about structuring the assets you do have (outside of the home) to pay you a regular income such that you can live the bigger, fuller, happier life.

If you or someone you know needs advice in this space, please don't hesitate to reach out.

Thanks, James.