Are you heading for retirement and rattling around in a house too big for your needs? Downsizing may be a great way to reduce household bills and benefit from an easier to maintain home and garden.
It can also provide a welcome windfall in retirement – the average amount generated by moving from a detached home to a bungalow is £97,722, according to Lloyds (November 2013).
And if you’ve been waiting for the housing market to pick up, now may finally be the time to erect a For Sale sign. As house prices continue to rise, Henry Pryor, often described as the BBC’s favourite property expert, thinks transactions will increase too. He said: “Downsizers should find that not only will there be buyers for their home, but as cash buyers, they should be well placed to bid for a new, smaller property.”
Of course downsizing requires careful consideration. When it comes to the crunch, many older couples are too attached to their family home, or may want to keep room for visiting grandchildren. Others are left disappointed by how much cash, after stamp duty and fees, such a move would generate.
So if you’re thinking of taking the plunge, follow our four-step guide to downsizing:
- Does it make financial sense?
The housing market may be picking up, but this affects the home you're buying as well as selling. Start by getting your house valued by several estate agents and researching prices for the type of property you want to buy. Remember to also factor in expenses such as stamp duty, which is payable on all homes over £125,000, as well as survey, solicitor's and estate agent's fees. If you're hoping to raise a lump sum, is the price difference enough for your needs after moving costs? Also consider the running costs of your new home and check that smaller will mean cheaper. If you are moving to a flat or an apartment you may need to pay an annual service charge to maintain the communal areas, for example.
- Consider your new location
Think carefully about where to buy. Buying agents say most downsizers are looking for an urban home within walking distance of amenities. If you won't have room for visitors, aim to be no more than an hour away from family so they can visit for the day without needing overnight accommodation. Many downsizers want an energy-efficient, easy to maintain, lock-up-and leave property. They also want to enjoy nearby museums, cinemas, cafes and shops.
- Think outside the box
If you're used to a rambling family home and a large garden, a smaller property can seem underwhelming. But Jan Hytch, a former president of the National Association of Estate Agents, advises: “Avoid arranging your new rooms like those in your previous house. Instead, think about new layouts and consider built-in storage, sofa beds and fitted wardrobes to maximise space.”
- Get rid of your junk
If your loft and garage are bulging with old knick knacks, moving home is a great time to declutter and decide which items to take with you. Don’t try and fit old furniture into a new space as this will restrict your options. Buying new furniture should be factored into your finances. Give away old items to family members or charity, sell your furniture online or in the classified section of your local newspaper, or contact a local auctioneer.
Article originally published in NFU Mutual Wisetalk magazine in spring 2014