The pressure to ‘downsize your house’ is increasingly becoming a concern for an ageing population, which expects to live longer and so requires more disposable income to fund post-retirement life. Yet there is also a significant concern for those reaching this stage of their lives, and within the community as a whole, that those looking to downsize their homes are not able to age/retire in the same neighbourhood where they have perhaps resided for decades and call home. This is due to the significant rise in house prices in many of Australia’s major markets.
Emotional connections to a home and a neighbourhood can be a significant obstacle for those who really do need to downsize their home, and pressures from children and peers, however well-meaning, can exacerbate the emotional toll of such a large decision.
Managing a family home can also become difficult as we age, especially for those living in homes with multiple levels, but there are alternatives for those who want to avoid being pushed out to an area with which they don’t have a connection.
5 ways to downsize your home without selling
1. Lease areas of the home
One of the best ways to downsize your home without having to sell or move homes, is to divide it in some way and lease a section of your home, either on a short term or long term basis.
A fantastic way to both ease your financial burden and your burden of maintenance for your home is by leasing a part of your home. One option is to lease your home through Airbnb. This is primarily a financial arrangement, and may make it easier for you to afford to stay in your home, while compartmentalising/downsizing your home. However, there is more work involved in leasing part of your home through Airbnb or similar platforms, and as you age this may become too strenuous. A great solution is to either use Airbnb for the early years of your retirement as well as use a cleaning service to help maintain your home for lease.
The alternative to Airbnb, and a longterm option for downsizing without moving/selling, is to lease a section of your home to a tenant. These arrangements are often done without the services of a property manager, so require a lot of understanding and open communication between you and your tenant. Consider engaging an agent if you wish to distance yourself from some of the financial/administrative aspects of leasing part of your home.
2. Become a grey nomad
A medium-term option for those who don’t wish to sell their family home too soon is to lease it out while you travel. Your rental income can cover the costs of travelling comfortably with a caravan, and can provide you the time to explore new areas in which to live, and broaden your mindset about your living arrangement. It is hard to overcome the power of market forces if they dictate that you cannot afford to downsize in your local area. Give yourself time to adjust to the idea, and know that travel will help you adjust to new challenges in your life.
3. Invest in a second home with your equity
For those who have the ability to do this, consider using your equity to invest in a second home in which you can either live in within your neighbourhood or split your time between (especially if you lease a section of your existing home to a longterm tenant). This can help you establish a connection to a new area in a way that doesn’t cut you off from your old neighbourhood immediately.
4. Give your house to the kids
One option for keeping your family home in the family is to provide a home for your adult children, possibly leasing a section of it to them or simply living with them in the home (you may even consider extending the home to accommodate the growing family). It is not a norm in Western society for families to live together in a multi-generational sense, but there is no reason why this cannot be a fantastic solution to your downsizing concerns, as well as your childrens’ financial and family concerns.
5. Share with other retirees
An increasingly popular trend for those entering retirement is to avoid downsizing and actually share their home with similarly-aged people. This option can be a great way to create a support network within your home as well as spreading the financial and administrative burden of owning a large home.