Many homeowners make the decision to downsize their property at some point in life, usually due to a change in circumstances. One of the most common reasons for downsizing is when children grow up and move out of home and the space in longer required, but there are lots of other reasons why people may decide to downsize.
In some cases, people might have a larger property in a more rural area, but they want to live closer to the city to enjoy a different lifestyle. In prime central London locations, properties tend to have less space, while still commanding high prices, so people might need to downsize if they want to move there.
Retirees may also choose to downsize to release equity from their property. Desirable Surrey areas such as Cobham and Hinchley Wood have some of the highest value properties in the country, and downsizing from a large detached to a smaller semi-detached property could release around £800,000 in equity. Another reason retirees might downsize is to reduce the amount of maintenance and cleaning required for a larger property.
Downsizing can be a difficult decision, especially when you have an emotional attachment to the property but there are numerous benefits to doing so.
Read on to find out more about what downsizing involves and the reasons it could be a good option.
What is house downsizing?
The term “downsizing” generally refers to selling a large property to move into a smaller home, but it can also mean selling a more expensive property to buy a lower valued one. As well as potentially releasing equity in a home, downsizing can save money on energy bills and reduce the upkeep such as cleaning, gardening and maintenance.
When to consider downsizing your house
These are some of the most common reasons for considering downsizing:
1. You no longer need the space
If you no longer use all the rooms in your property, downsizing can be beneficial to move to a smaller property that is easier to manage, while also financially benefitting from the proceeds of the sale. You could choose to downsize your house to pay off debt, using the value accumulated in your property to pay off loans, for example.
2. To generate money and improve affordability
Another situation where you might consider downsizing is if you are struggling to afford mortgage payments and bills. Some people are forced to downsize their house so that they can repay their mortgage loan and either rent or buy a smaller house with lower mortgage payments and energy bills. Paying off your mortgage could give you more financial freedom and allow you to pay for holidays or gift your children/grandchildren money for a deposit for a house, for example.
3. To suit your retirement lifestyle
Downsizing for retirement is another common scenario, with retirees preparing for their older years in a smaller property with less responsibilities for cleaning and maintaining their home. After retirement, people may prefer to move to a new location with accessible local amenities or move to be closer to family.
The pros & cons of downsizing your house
Selling a property and moving house is a significant change and one you will want to carefully consider before making your decision. If you are selling a family home, you’ll no doubt have lots of memories attached to your home and you’ll feel comfortable living there. However, the pros of downsizing will usually outweigh the cons, and it could be a much better long term option for you.
Here are some of the factors to consider when deciding whether to downsize:
Reasons to downsize my house
You no longer require all the space in your home, for example, not using bedrooms anymore if children have grown up and moved out.
Your property has equity that you could release to use to finance your retirement, pay off loans or purchase a holiday home.
As you get older, you might struggle to keep on top of the work involved in the upkeep of a larger property.
If you want to move location, downsizing can help to afford a property in a more suitable area. You might want to move closer to family and it makes financial and practical sense to buy a smaller property.
To reduce mortgage payments and energy bills to save money.
Reasons not to downsize my house
To avoid the costs of downsizing and upheaval of moving home. Even if you are releasing equity from your home, you will have fees to pay such as solicitors and estate agent fees.
If your emotional attachment to the home makes it too difficult to sell.
If you don’t want to live in a smaller home with less space, especially if you have lots of belongings or you’ll miss having spare bedrooms for visitors.
Tips for downsizing to a smaller house easily
Any type of house move requires preparation but moving from a larger home to a smaller one has some additional challenges. Here are some tips to make downsizing go smoothly:
Assess your finances – Whatever your main motivation is for downsizing, assessing your finances will help you to plan accordingly. If you are looking to buy another property, you’ll need to know your property budget and costs of moving to make sure you can use the proceeds of the property sale to cover everything you have planned.
Declutter – When you have lived in a property for many years and have built up a large collection of belongings, there’s a good chance that there won’t be enough room for everything in your new home. You should start clearing out unused items, pass larger sentimental belongings onto family and be ruthless about what you take to your new property, as you won’t want to feel cramped.
Optimise space – Even after decluttering, you might face some challenges when it comes to moving all your belongings into your new home. Take measurements of the space in your new home and consider adding storage space with multi-functional furniture such as a bed with drawers.
Do I pay tax if I downsize my house?
If you are buying another property, you will usually need to pay stamp duty if the house value exceeds the stamp duty threshold of £125,000. Your stamp duty rate will depend on the price of the property you buy. As a guide, a £300,000 property would incur £5,000 in stamp duty tax.
What is part exchange when you downsize your house?
Developers of new build properties will sometimes offer to part exchange your home, by purchasing your home from you and using the value against the payment of your new home. This option can remove some of the stress involved in selling a home but developers might not pay as much for your home as you would get by putting it on the open market.
There are many good reasons for downsizing, for both financial and practical purposes, but the most important factor is that it is the right choice for you. Hopefully this guidance will have given you a wider picture of the pros and cons to help you to make the most suitable decision to meet your long term plans. YOur guides can help you work through numerous topics – from what to do if you can’t pay your mortgage, to releasing equity from your home or how to sell your house during divorce.
If you are thinking about selling a property in Surrey areas including Claygate, Bookham or Esher, we can provide you with a valuation to help you to assess your options.
Gareth is a dedicated professional at Davies Property Partners, committed to delivering exceptional service with a transparent and client-focused approach. Having spent his entire career with the family business, he has played a key role in building its strong reputation in the local property market. With deep roots in Cobham and an intimate understanding of the area, Gareth excels at providing tailored solutions that go beyond expectations.
