Downsizing refers to the process of selling your family home when you get closer to retirement age to purchase and move into a smaller place. It is a process that different housing experts propose as a great way to combat the housing shortage. It allows young families to move into homes that people whose kids are now independent and have moved out no longer need. This decision has 5 main benefits for the downsizers themselves.
1. Downsizing can free up equity
The first benefit to embarking on a downsizing journey is to free up equity. Owning a bigger home you no longer need day-to-day means that you are sitting on a lot of money that could be used for different expenses.
By selling your larger home and buying a smaller one, you can set money aside to bolster retirement savings or even enjoy a more comfortable and financially secure lifestyle.
You could also be using that extra money to help your children get onto the property ladder. The current housing market is far from kind to young professionals looking to make their first home purchase. It is therefore becoming more and more common for parents to help their children fund their deposit. This is Money suggests that around 47% of house purchases in 2023 had support from the Bank of Mum and Dad (BoMaD).
2. Downsizing can reduce your mortgage costs and expenses
If you are still living in the family home you raised your children in and no longer need the extra space, it could be worth considering downsizing. It can be really expensive to continue paying your mortgage on a four-bedroom house when you could comfortably live in a smaller home. Opting to buy a smaller home typically means a smaller mortgage, resulting in lower monthly payments.
Your mortgage repayment wouldn't be the only cost to decrease. Choosing to buy a one-bedroom bungalow or a two-bedroom flat will also reduce your expenses such as taxes and maintenance costs.
Considering the ongoing cost of living crisis and the rising energy costs, the Downsize your energy bills report from the Intergeneration Foundation found that "downsizing [...] could save 8 million homeowners up to £5,000 a year in lower energy bills".
3. Downsizing can be more energy-efficient
UCL Professors Gesche M. Huebner and David Shipworth found in their research paper, All about size? – The potential of downsizing in reducing energy demand, that there is significant underoccupation in English homes, even in cities. This means that bigger homes are not being used by families who need that space in their daily lives.
Downsizing would then help decrease energy consumption by having people move into smaller homes that suit their needs. You would no longer need to heat a larger house for two people for example which would reduce CO2 emissions.
A good idea to ensure your new home is as energy-efficient as can be is to prioritise new build homes. They are designed to meet higher energy standards. They come with better insulation, higher air tightness and appropriately sized windows to let the light in without losing warmth.
4. Downsizing can help with mobility issues
If you are currently living in a bigger home with stairs, downsizing to a smaller home on one floor can be a great way to fix mobility issues. If you are looking to downsize by moving into an apartment, most modern buildings now benefit from larger lifts as well as wider hallways which can be very useful in case you require a mobility aid.
If you're thinking that this isn't even a consideration for you right now, it might actually mean you're in the right position to downsize. Think of it as planning for years to come. Managing the move and change of lifestyle will be easier if you are starting in your 50s as opposed to later on in life. Once that is done, you won't need to worry as much about how your situation evolves since your new home will already be suitable.
5. Downsizing can help you move to a livelier area or to a city
Another great benefit of downsizing is that you can decide to move closer to a city since you don’t need as much space as before. It’s a great way to open a new chapter in your life and take advantage of the proximity to cultural events, museums, theatre and such.
A potential issue faced by downsizers when trying to move to a smaller home is the lack of alternatives. Peabody New Homes offers a number of homes available through private sale that will suit your new criteria. Our new build one, two and three-bedrooms homes are located in vibrant areas that benefit from great connectivity in the way of our Higgs Yard homes located in Brixton. You can then be within walking distance from coffee shops, restaurants, parks and workout classes. This is a great way to make the most of your retirement and keep active even once you enter this new chapter of life.