Downsizing, or the act of moving from a larger property to a smaller one, is a popular choice for many people, especially the elderly who may no longer be able to manage all of the tasks associated with maintaining a substantial dwelling.
According to data from the Prudential, more than four million homeowners over the age of 55 plan to downsize in the coming years, with the average person expecting to raise more than £112,000 in equity release from the sale of their homes.
Some 10 per cent believe that they will be able to make more than £200,000 by downsizing their homes.
- Reasons for Downsizing
- You Want To Move To A New Location
- You’re Sick Of High Maintenance Costs
- You Don’t Need So Much Space
- You Want To Raise Money For Retirement
- Best Time To Downsize
- Downsize Step 1: Assess Current Need And Future Needs
- Downsize step 2: Choosing Property Type
- Downsize step 3: Ways to sell your property
Reasons for Downsizing
People decide to downsize their homes for all kinds of reasons, some financial, and some related to their quality of life.
You Want To Move To A New Location
Living in the same area all your life might allow you to build deep relationships with the community, but it can be tedious having to remain in the same place.
Many people want to move, and downsizing can provide a great way to do this, whether for work or just a change of scene.
You’re Sick Of High Maintenance Costs
Owning a home is expensive.
According to data from This Is Money, the average UK resident pays more than £9,590 per year in costs, including energy bills.
Downsizing is a great way to cut down on practically every cost associated with owning a home, including heating bills, water bills, and general maintenance costs.
You Don’t Need So Much Space
If the kids have moved out and you’ve got empty bedrooms, then you’re living in accommodation that is larger than you need.
By all means, choose a property with a big kitchen and garage, but it doesn’t make sense to continue living in a property designed for a family when there are only one or two of you.
You Want To Raise Money For Retirement
Downsizing can release an enormous amount of equity, allowing you to boost your retirement savings, retire from work early or sort out a divorce.
Best Time To Downsize
From a financial perspective, there is rarely a bad time to downsize.
When you downsize, you can start reaping the financial rewards almost immediately in the form of lower household bills, lower maintenance costs, and possibly lower council tax premiums.
However, some specific times of life are more suited to downsizing than others.
Perhaps the most popular time to downsize if when you reach retirement age.
Downsizing allows you to free up cash stored in your home and put that towards your pension pot, giving you more flexibility and freedom.
Many people also choose to downsize when children leave home.
There’s often no point living in a house with all those extra bedrooms – better to move to somewhere cheaper and use the spare cash for other things, like holidays.
Finally, people tend to downsize when they don’t want to put as much effort into maintaining their property.
Smaller properties require much less care. And in the case of leasehold properties, such as flats in apartment buildings, maintenance can be negligible.
If you’ve decided to downsize, what steps do you need to follow to ensure that you make the right decision?
Let’s take a look.
Downsize Step 1: Assess Current Need And Future Needs
When downsizing, it’s essential to consider both your current and future needs.
Right now, you may be in good physical health, but in the future, you may have mobility needs that need to binge taken into account.
Homes with particularly steep stairs or steps up to the front door might not be ideal if you’re planning on staying long-term.
Remember, when you downsize, it’s unlikely that you’ll want to move again in the future.
People who downsize often buy their “forever home,” so it has to be fit for purpose not just now, but in the decades that follow.
Another decision is where you will live.
The location of your downsized home should ideally be near to the people and amenities that you need.
Finally, remember that although a home might be suitable for day-to-day living, it might not be large enough for when you have family come to stay, including grandchildren.
Size, therefore, may factor into your consideration.
Downsize step 2: Choosing Property Type
When it comes to property type, you have several options.
Bungalows are an excellent choice for people of retirement age because they do not have any stairs or upper floors.
Park homes are another excellent option.
Nearly a quarter of a million people live in park homes, static caravans that can cost as little as £20,000.
Park homes are suitable for people who want to release the maximum amount of equity possible from their homes and want to live in a community of similar people.
Retirement villages are specially-designed places where you not only get accommodation but also support you need if you have additional care needs.
Retirement villages offer things like cleaning services, on-site medical support, and visiting hairdressers.
Downsize step 3: Ways to sell your property
There are several ways you can sell your property.
Auctions are a great way to guarantee that your home will sell. People who attend house auctions are often looking for a bargain.
But be warned: you might not get as money as you’d like from your home.
Selling privately – that is, without an estate agent – helps you save on costly estate agent fees.
The downside is that you have to do all the advertising yourself.
Listing sites provide a cheap and effective way to get your property in front of buyers.
However, you may have to pay listing fees.
Estate agents offer a range of services, from advertising your property to valuations.
Estate agents can often sell a home quickly, but they also charge a lot of money for the privilege.
A home buying company is a company that can pay for a home in cash, there and then.