Millions of homeowners approaching retirement are living in houses which they themselves consider too large for their requirements (25 percent of over 60s) and yet only a dearth (14 percent) have considered downsizing as an option to free up cash, according to a survey commissioned by Churchill Retirement Living.
Downsizing can have wider social benefits as it is estimated that every downsize move frees up two or three more houses down the property chain. This is important when we consider how many first-time buyers and families struggle to buy an appropriate home.
However, in response to the pandemic, fewer people approaching retirement age are looking to sell, exacerbating the UK’s unprecedented housing supply crunch, and contributing to spiralling house prices over the past 12 months. According to Legal & General Financial Advice, these proposed moves would free up roughly 2.9m homes.
What is interesting, is it is thought that on average people believe they could make £150,000 if they were to downsize, with 1 in 10 people surveyed by Churchill saying this figure would be between £250,000 and £500,000.
Aside from the potential financial benefits, there are also other advantages to considering a smaller home. Many people are aware that their homes are too large to suit their daily needs and as they get older, properties become harder to clean and maintain, particularly if they become less able to manoeuvre through as many rooms and stairs.
Many people have spare rooms which are seldom used, and often become storage rooms. Downsizing, whilst it can seem a daunting prospect, especially when years of family memories are often engrained in the walls of a home, can also bring about greater freedom and a more enjoyable retirement.
Here are our top 5 benefits to downsizing:
- Increased cash flow
Downsizing enables homeowners to free up equity, particularly if you move within the same location or perhaps even somewhere with lower house prices which would enable you to still buy a property with plenty of room…but not too much. If you are approaching retirement age and haven’t yet paid off your mortgage this could be a good way to do so.
- Eliminate clutter
Moving to a smaller home provides an opportunity to declutter. As we age, we accumulate pieces of furniture and sentimental belongings. By moving to a home that will not be able to accommodate these possessions, homeowners are stricter with filtering out what they really want to keep.
- More time
A smaller home means less time spent on maintenance and chores and more time taking days out and doing activities for pleasure.
- Lower bills
One of the main benefits of downsizing is the fact that a smaller home will incur lower monthly costs. Not only will the mortgage be cheaper (if you have one) but homeowners won’t be heating up and powering a 4-bedroom home with multiple living zones when only 25 percent of the space is being utilised.
This results in noticeable reductions in everything from energy bills to maintenance costs. In terms of monetary savings, it is also worth noting that a smaller home will also reduce insurance costs.
- Lifestyle changes
Another one of the great benefits of downsizing is the lifestyle changes that such a move triggers. As previously mentioned, downsizing gives more time and freedom to enjoy hobbies, activities and weekends away.
Of course, it is a difficult decision and homeowners must weigh up these benefits against the practical and sentimental reasons which may prevent them from downsizing.
If you have considered downsizing but would prefer not to go down putting your home on the open market and would prefer a quick sale, for whatever reasons, WeBuyProperty is available to talk through your options and provide you with a no-obligation valuation.
We could help you transact and free up retirement cash in a matter of weeks.
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