“Oh, Jesus – I survived it. I think that’s the best way to put it.”
That’s the reaction of one north Dublin pensioner when asked about his recent efforts to downsize; moving to a smaller home once the children have flown the nest is no easy task.
“I’ve lived all my life here – I was moving from one end of the street to the other, from the house I was born and reared in – to a small estate at the other end of street. Geographically we are talking about 250 yards,” the pensioner says. He does not want to be identified due to a dispute about costs involved in the move.
“It was shocking. There was a chain of about five house purchases hanging on mine going through. It was all to be done in one day. My wife became ill; it had to be postponed and there was a collapse of the chain. Bridging finance wasn’t available – it was horrific stuff, for which there has to be an easier system.”
It is certainly not unusual for a married couple in their 70s whose children have long since moved out to experience difficulty maintaining a larger home. But the process of first finding a smaller one for sale – and then organising the finance and timing around a move – can be fraught and stressful.
The term “empty nester”conjures images of well-off retirees knocking about in large suburban homes with empty bedrooms; meanwhile, young aspiring homeowners are priced out of the property market and paying extortionate rent for sub-par accommodation.
It is similar to the “boomer” narrative that has been part of the conversation around wealth and privilege in the US – the idea that the older generation of “baby boomers” (people born between 1946 and 1964) took advantage of cheap house prices decades ago and are now lording it over younger generations.
The implication is that these so-called empty nesters should just move into smaller homes and leave the youngsters to get on with their lives. Understandably, it is a term that is resented by many.
Richie Carroll is co-founder of a “rent-to-own” platform called Homely. It buys homes that clients ultimately wish to own outright – and rents those properties to them while the customer puts the purchase financing together.
Richie Carroll, co-founder of ‘rent-to-own’ platform Homely
“You see the homes coming up for sale and they haven’t been renovated in 40 or 50 years,” he says.
“People are entitled to live in those homes – you can’t just say every old person should move out of their half-empty homes. They will feel attacked, and that is a totally fair reaction. It is about giving them the incentive and making it attractive to downsize.”
Carroll says “downsizers” have come to his company looking for a means of bridging the gap between selling their property and moving into a new one.
“One customer called up who had their mortgage paid off and they were living on two civil-servant pensions. They wanted to move from a home worth €600,000 to one half the price,” he says. “But they couldn’t time the transaction and get the bridging finance for the three months needed to facilitate that.”
Recent developments in the banking sector have changed the picture somewhat, Carroll says. Bank of Ireland is bringing out a new loan product in the new year for people seeking to downsize that will enable them to draw down finance on a smaller property before they sell the home they have been living in. With both properties serving as security, the bank says the sale of the first property will clear the borrowing and any accrued interest within 12 months. The interest rate attached will be 7 per cent variable. Other lenders may follow suit.
Making the move to a smaller property in retirement is not always motivated by the costs and efforts involved in maintaining a larger one. In a housing market with rising prices, many see it as an opportunity to help their families financially.
[ How property tax could be used to make empty nesters sell their big housesOpens in new window ]
“Definitely go for it,” says retired Dublin accountant Dara Hogan.
He and his wife Mary made the jump into a smaller home back in 2021 and are delighted with how it has worked out. The two decided to make the switch so that they could release equity stored up in their home and pass it on to their children who were “in the prime of their lives”.
Selling the family home in Rathfarnham, south Dublin, for a smaller one close by, enabled the couple to pass on the benefit of the positive equity while also staying in the same area as their family.
“The key thing is the difference in the price you get for your current house – and the one you pay for the new one – it is about maximising that gap,” he says.
He notes that rising property prices since 2021 may well have changed the numbers involved to their detriment. As for the process they went through, he says: “The whole thing is ludicrous.”
Again, finding finance to bridge the gap was a problem.
We can sell our house tomorrow but can’t afford to buy a smaller house in town – the cost is higher. Everything we need is in Limerick, but we cannot afford it
— ‘Siobhán’
“I wrote personally to Colin Hunt [chief executive of AIB],” says Hogan. “I said myself and Mary had a combined century of loyal service to AIB along with spotless credit records, asking him to help us out just as AIB had bridged our previous house move when we took out our AIB mortgage in the 1980s.”
Hogan said he received “a short, negative reply” from the bank.
Asked to comment on his exchange with AIB, a spokesman for the bank said it had “not seen significant demand for specific mortgage bridging products for customers who are trading down” but it keeps products “under constant review”.
“Where customers are involved in a closing process between two properties we work closely with them and their solicitor to ensure a streamlined drawdown process to enable such sales to close,” said the spokesman.
Referring to the new product from Bank of Ireland, Hogan says “it is about time” that banks are beginning to offer bridging loans.
“The interest rate is a rip-off, but the duration is so short that people, I suppose, should be able to afford it. I think we would have used it,” he says.
People looking to downsize face different challenges in different parts of the country.
“Siobhán” (not her real name), who is from Co Clare, and her husband are in their early 70s and struggling to “right-size” from their isolated, rural three-bed not far from Limerick city to a smaller urban property.
“We can sell our house tomorrow but can’t afford to buy a smaller house in town – the cost is higher,” she says. “Everything we need is in Limerick, but we cannot afford it. We need the hospital – the doctor, the dentist – we worked in Limerick city all our lives and we need to maintain those contacts.”
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She says shopping is significantly cheaper in the city too – and, in the country, it becomes difficult to avoid using the car, with its high running costs.
“We also need to be near family members and friends. I have spoken to one neighbour in the last two weeks – you have to make a huge effort to keep in contact with people. If you want to go to the cinema or go for a drink you have to drive – you always have to be moving,” she says.
Siobhán and her husband find themselves just outside the boundary for the Rightsizing Scheme being offered by Limerick City and County Council. The scheme is designed to free up family homes by allowing people over the age of 55 to sell their home and apply for a tenancy in a suitable older person’s dwelling.
Instead they will be left to put their home on the market in the new year and hope they can somehow make up the difference in the private sector.
According to research from the Economic and Social Research Institute, the Republic’s “under-occupancy” rate is among the highest in Europe.
As per the official definition, a home is under-occupied if it “has at its disposal more than a minimum number of rooms considered adequate”. The paper found that Ireland had a rate of 67 per cent – more than twice the European average.
It suggests that a big part of this is down to the preference in Ireland for larger homes with more bedrooms – compared to the wider prevalence of apartment-living on the Continent.. It found that more than 73 per cent of homes in the State had more than two bedrooms.
Should the Irish population continue to age at current rates – and households continue to shrink – it finds that this problem is likely to become more acute.
[ We haven’t bought a house in 35 years. How should we go about downsizing?Opens in new window ]
So even if finance is fixed, the bigger issue for many downsizers will be the lack of availability of suitable homes on the market.
Richie Carroll of Homely says helping older people to downsize will be part of the solution, but without the availability of smaller homes to move into, and more housing in general – the housing crisis will inevitably rumble on.
“The way we manage it politically is important,” says Carroll. “The youth are getting pretty annoyed and disheartened – people are sitting in traffic coming from Kildare, Meath, Wicklow – while there are homes vacant and derelict in Dublin.
“If you start building smaller, denser and higher, there is naturally a fit there for downsizers”.