Could Downsizing be an Option in 2017?
"Choosing to downsize and buy a small house can be a momentous decision. Often, it involves leaving behind a beloved family home and many precious memories."
For many years each successive UK government has promoted support for first time buyers to help them get onto the housing ladder.
Help to Buy schemes, Help to Buy ISAs, Starter Homes schemes have all had some degree of success, but the major challenge still facing the UK is to increase the number of affordable properties available and young people are still finding it hard to get onto the housing ladder.
Growing in popularity today is the concept of last-time buyers. By helping last-time buyers to move this could release the logjam in supply and provide suitable homes more quickly than building new homes.
Just consider the numbers from a Cebr Legal and General Survey:
“Legal & General’s analysis of these older homeowners shows there are 3.3 million homeowners who are aged over 55 and looking to downsize in future, according to data from the Centre for Economics and Business Research (Cebr). These ‘last-time buyers’ (LTBs) are sitting on £820 billion of property wealth and 7.7 million spare bedrooms. The equivalent to 2.6 million family homes, this represents 10 years of housing supply based on Government targets – or 20 years based on current housing completions!” *
The UK currently needs at least 250,000 new homes per year to cope with demand and we are managing to build only on average around 145,000-150,000 new homes.
Pressure groups are now lobbying to make downsizing more attractive to people and easier to achieve. They are seeking options to remove stamp duty for those looking to downsize, and encouraging builders to build more appropriate new housing for this market.
So if downsizing is on your agenda, what should you consider?
Choosing to downsize and buy a small house can be a momentous decision. Often, it involves leaving behind a beloved family home and many precious memories. However, there are a whole host of benefits and the move can be genuinely life changing.
Reasons to consider house downsizing
Downsizing isn’t something that only happens in old age. It can make sense to downsize at any point during your life, for one of numerous reasons.
One of the most obvious benefits of selling your home and buying a smaller, cheaper property is the subsequent release of equity. For many homeowners, substantial amounts of money are tied up in their property. Sometimes, circumstances make it necessary for us to access such funds, whether it be to pay off debt, fund a child’s university years, pay for a family member’s care or any one of a myriad of things. Downsizing can massively assist with funding major lifestyle changes by significantly reducing mortgage payments.
Buying a small house can also dramatically reduce your responsibilities, both physically and financially. Large houses require constant cleaning and upkeep, which can become impractical or tiresome for the home owner. Household bills, particularly heating, are another serious burden which can commonly be reduced by downsizing.
For anyone struggling to comfortably move around or perform simple daily tasks in their own home, downsizing to a more suitable property can vastly improve their quality of life. Bungalows or sheltered/retirement housing can help restore an individual’s independence and sense of pride.
Sometimes, downsizing is simply an emotional or lifestyle decision. Wanting to be closer to family or beautiful scenery can be a major motivating factor in choosing to buy a smaller home. After all, greater size doesn’t necessarily mean greater quality of life.
Finally, why limit yourself to one property? It is not uncommon for people to sell larger properties to buy two smaller homes, normally one in the city and one in the country, or perhaps an investment property or a holiday home overseas. This allows you to enjoy the best of both worlds.
* Cebr for Legal and General 2012
Your house downsizing options
• Downsizing does not have to mean a bungalow. Whilst this might be the best option for anyone with mobility concerns, there are numerous options out there. For example, if you are downsizing with the aim of having more money to travel and see the world, an apartment may be most suitable. The lack of garden and associated upkeep can be an enormous help for anyone who doesn’t plan on living there full time.
• Focusing on smaller properties can dramatically open up your city or town centre options. Easy access to amenities, without need of a car, is certainly a great benefit of downsizing.
• Remember, downsizing is just like buying any other home. Make sure you are aware of the fees involved in buying and selling a property, especially if you are moving for financial reasons. If this is going to be your last-time purchase, always take advice from both your solicitor and financial advisor.
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