Yopa: How to make the big (or small) decision

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How to make the big (or small) decision

Is downsizing right for you?

Yopa: Is downsizing right for you?

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Contents

Thinking of downsizing

Where to start Potential disadvantages of downsizing Other things to consider Alternatives to downsizing So is downsizing right for you?

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Yopa: How to make the big (or small) decision

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Thinking of downsizing?Are you coming towards the end of your career, but have concerns about funding your retirement? Are you already enjoying retirement, but want to free up some capital? Or is your home just a bit bigger than you need it to be?

If any of these sound like you, you might have already heard of, and considered, downsizing.

If you’re thinking of downsizing but haven’t made the leap, here’s our handy guide to deciding whether to stick or twist. We’ll help you consider the benefits and the downsides, take into account some common pitfalls, and share expert insights from our local Yopa agents and our friends at Property Price Advice.

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Spotlight

Where to startAccording to Prudential, 47% of homeowners over the age of 55 are planning to downsize in their later years. However, this isn’t a choice that people take lightly, and the decision is ultimately a very personal one.

It’s an obvious place to start, but it really is worth revisiting the reasons you want to downsize. Getting the situation straight in your head, weighing up the pros and cons thoroughly, and doing your sums meticulously are all crucial parts of the process. Of course, there are some clear benefits to downsizing.

Exmouth, Devon

The seaside resort of Exmouth is one of our top picks for downsizers due to its great transport links, sunny climes, relatively low crime rates and - most importantly of all - its fabulous sandy beaches. House prices are also fairly reasonable considering its desirable location, with the average flat selling for around £195,000, and an average semi-detached property fetching around £285,000, according to Rightmove.

Firstly, you’ll have less space to manage and maintain, and probably some more money in your pocket for enjoying retirement - or whatever your later life plans may be. Hanging onto a larger property as you get older, and when your young ones have flown the nest, might not feel worth it. A fresh start in a smaller home, one which makes everyday life just a little bit easier, can be just right for those who want make the most of their later years.

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It’s important to remember that moving home can also be stressful, especially if it’s a long time since you last bought or sold. Selling your home involves getting to grips with the market, finding a conveyancer, and negotiating a price, all while trying to find your new place. That’s why it’s important to find an estate agent who can help you with everything from start to finish.

In short, downsizing has plenty of benefits, but it’s important to make sure it’s what you want. Let’s take a look at the pros and cons of moving to a smaller home.

Benefits of downsizing

There are some very practical advantages to trading in a larger property for something smaller during your retirement. Here are a few of the biggest.

Raising money

This is probably the biggest motivator for many downsizers. The property market is buoyant despite recent political changes, so cashing in and moving to a home that costs less than your old one is a popular - and very sensible - way to raise extra funds for your retirement.

Lower bills

In addition to releasing equity from trading down, you’re also likely to pay less for upkeep and utility costs. A smaller property is cheaper to heat, run and maintain - and you may have a smaller council tax bill too, which means more money in your pocket.

Less to look after

While having extra space is good for hosting guests, and vital for family life, in retirement less is often more. A smaller home means less tidying and cleaning - and more time to relax.

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Accessibility

Bungalows are the most desirable properties for downsizers, and for good reason. If you think you might struggle with stairs in the future, moving to a bungalow (or a property with room for accessible facilities) will make your life easier.

A better location

As we get older, the proximity of local amenities matters more. Moving to a home where you are closer to shops, leisure facilities, hospitals and other essential facilities can make a world of difference further down the line.

Spotlight

York, North Yorkshire

The historic city of York needs no introduction. Surrounded by ancient city walls, it has long been a hub for culture, arts and history. The city also has fantastic transport connections, with trains to London taking just over two hours and Leeds Bradford Airport only a short drive away. According to Rightmove, you can expect to pay around £250,000 for an average semi-detached property in the city.

Downsizing also gives you the chance to move closer to family or friends, or sometimes to relocate to an area with lower crime and more tightly-knit communities. Moving abroad

Downsizing isn’t just about buying property in the UK. Perhaps you want to free up some money to purchase a second home abroad, or even leave the UK for somewhere warmer. Over the past decade, downsizing has become an increasingly popular way of doing just that.

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Potential disadvantages of downsizing Every argument has a counter-argument, and it’s worth working through the potential disadvantages of downsizing too. Here are some pitfalls you may want to consider.

Stress

Staying put is often the easier option, especially if you’ve been in the same home for a long time. Not only do you have the process of buying, selling and moving to contend with, but you may take a while to get settled into your new home too.

The cost of moving

It’s may be financially savvy to downsize, but remember that there are costs associated with moving, too. Costs can easily mount up, and a trade-off that looks like a six-figure profit at first glance can end up considerably less. There’s stamp duty (it may be less than your previous property, but it still counts), other legal fees, removals, new furniture and any maintenance to the new property to think about. Remember that most estate agents will take a commission when they sell your home, which can also add up to a lot.

Consider choosing an estate agency that charges fair fixed fees, like Yopa, so you always know exactly what you’re going to pay (and it’s often far less than typical estate agency fees). Our partners can also help you find a conveyancer at a competitive price, as well as suitable mortgage deals, to help you on your way. Less space

In many ways it’s a huge advantage to have less space to maintain, but it can also be the opposite depending on your lifestyle. Some people really feel the change when they downsize, with less room to host events, have guests over to stay, or put up returning children. If your home is often filled with people, ask yourself if you could have the same thing in a smaller home.

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Inverness, Scotland

Spotlight

Known as the ‘Gateway to the Highlands’, Inverness is a great choice for downsizers due to its highly rated GPs (4.6/5 on average), low crime rates and fantastic natural scenery. Inverness was even voted the happiest place in Scotland in 2015! The average house price in the city is just £185,000 as of February 2019, according to Rightmove.

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Other things to consider

Now we’ve weighed up the pros and cons of downsizing, it’s time for the nuts and bolts. If you decide to downsize, what should you take into account when you move?

Market conditions

It’s likely that in the past you were trading up, and therefore any fall in the market had an advantage: essentially you would get more for your money. However, this time it’s different. Any drop in prices means losing out on sale value for your current home, and this could make a big difference to your retirement fund.

Your age

Downsizing can often be a case of ‘if not now, when?’ Moving house is exhausting at the best of times, but the later you leave it the harder it will be - which is why the majority of downsizers do so before their 65th birthday. Whilst the market needs to be right, you might also be keen not to waste time, and with 11 million people looking to downsize in the next 20 years (which will almost certainly push retirement-friendly property prices up), the sooner you sell up, the better off you may be too.

Mortgage age limits

Lenders tend to be more relaxed about the age of people borrowing money than in the past, when mortgage terms usually expired before retirement. The market has changed considerably since then, and most mortgages can now run until well into your eighties (provided you have proof of income). Either way, be sure to check your eligibility beforehand. Taxes

If you’re selling up in order to pass on some money to loved ones, make sure you’ve done your research on inheritance tax. Any gift, regardless of size, is treated as a ‘potentially exempt transfer’ - so if you live for seven years after giving it, you won’t be charged any tax. Be sure to read HMRC’s rules. As for capital gains tax, your main house is exempt from this - but if you have more than one property, you’ll need to check that the one you’re selling is considered your ‘only or main residence’.

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Callum Neill, local Yopa agent

“Due to high demand bungalows sell at a premium, and new-build bungalows often have smaller rooms. Look for bungalows with good transport links, local amenities, and a good local community.”

Yopa

Sorting your possessions

Most people have acquired all sorts of furniture and other items that need to go somewhere when you move. Downsizing naturally means there’s less space to play with, so you’ll have to go through the long-winded (and potentially emotional) process of working out what to take and leave. Don’t make the mistake of thinking this will be quick and easy - it tends to be the opposite! Our recommendation is to focus on ‘categories’ rather than decluttering room-by-room. Try not to get too tied down by nostalgia, because it will make the decluttering process so much harder.

Find your perfect new home

As well as finding the home you want to live in, it’s important to decide if it’s in the right place and will serve you for years to come. Remember that finding the ideal home may take time some time - many downsizers need an area that is well catered for by local bus routes, trains, or even traffic-free cycle paths, as these can reduce your reliance on a car and save you money in the long term. Local amenities are highly sought after for many downsizers, with large villages or small towns often providing the perfect mix between rural idyll and practical convenience.

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Whereas the past decade has seen strong and steady increases in average house prices, the outlook for 2019 and beyond is less certain. In particular, the looming spectre of Brexit seems to be causing some nervousness in the housing market, which goes some way to explain the rather meagre 0.8% house price growth predictions for 2019.

However, for downsizers in particular, we think that now is a great time to sell. Property prices are still near all-time highs, and the housing market readjustment in London and the South East is still in its infancy. By getting in now, you’ll be able to take advantage of the relatively buoyant market and maximise your final sale price.

SOLD

A word from Property Price Advice “

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Alternatives to downsizingIf you’re not set on downsizing but still like the idea of freeing up capital or making life a little easier, you might want to think about some popular alternatives.

Spotlight

Royal Leamington Spa

Known for its Regency architecture and ‘healing’ spring water, Leamington Spa is conveniency situated in the centre of England with fast train services to both Birmingham and London, as well as easy access to the M42, M6 and M40, making it perfect for those with family across the country. Although house prices are slightly above the regional average, this reflects the town’s desirability.

Rent your rooms

The advantage of having a larger house, especially once your children have moved out, is that you have spare rooms - and you can charge people to live in them. Renting out a room can make you up to £7,500 per year tax free. If you don’t fancy a live-in tenant, then short-term rentals managed through sites like Airbnb might be the best option.

Equity release

This allows you to release some capital from your home whilst still living there. These used to have a

bad reputation due to high charges and poor interest rates, but they’re far more attractive propositions these days. It is definitely worth considering as an option, but - as with all things property-related - always do your research.

Remortgaging

If you find that your mortgage is too much, you might have the opportunity to remortgage. In some cases, this means paying a lower rate that is easier on the pocket, and in other cases, it could mean you can shift any debt burden from personal loans or even credit cards onto the mortgage at a lower interest rate.

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So is downsizing right for you? Downsizing often makes financial and practical sense, but it does have some downsides - and there may be alternatives that suit you better, too. In short, make your mind up after doing extensive research, checking your sums, and deciding what you want from your home.

If you want to start looking at smaller properties, find out how much your current home is worth by booking a free home valuation with your local Yopa agent www.yopa.co.uk. They can give you tailored help and advice, and answer any questions you have about downsizing from your current home.

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