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Compare mortgagesDownsizing could unlock as much as £414,000
Even after stamp duty and fees, moving to a smaller property can pay off, our analysis suggests
Downsizing looks great – from a distance. You can finally cash in on decades of rising house prices, with a new, more suitable home to enjoy your now well-funded retirement.
To get there, however, you’re faced with an array of taxes and fees, not to mention the strain of rehoming a lifetime’s possessions.
Using house price data, stamp duty and other costs, we've found that downsizing could free up tens and possibly hundreds of thousands of pounds.
Here we reveal our findings and the regions to move to and from to maximise the money you make.
We also uncover what downsizing involves to help you decide whether it’s worth it.
When and why should you downsize?
‘Lots of people mull over the idea of downsizing for years,’ says David Fell, lead analyst at estate agent Hamptons. ‘Often there are strong emotional ties to a home that may have been lived in for generations.’
However, he cautions that the older you get, the harder it is to go through the physical and emotional stress of moving. ‘If you put off the move for too long, it can often mean putting it off altogether. Someone in their 70s is only 50% as likely to move as someone in their 60s.’
When surveyed, we found that our members who had downsized did so for a variety of reasons.
One in five said their main reason was maintenance and upkeep on their old property becoming too difficult, while one in eight wanted to release cash for their retirement.
High energy costs in recent years could be another reason to move.
According to British Gas, a five-bedroom house would have an annual energy bill of £2,415, whereas a three-bed's bill is £1,769 (though as the larger house estimate includes five people, the savings from downsizing will be a little smaller than indicated).
- Find out more: Moving house checklist
How much could you unlock?
Downsizing can be a powerful way to clear a mortgage or tap into the equity locked up in your home.
We’ve crunched the numbers and found you could potentially unlock hundreds of thousands by switching from a four-bedroom to a two-bedroom property in the same region.
The map below shows a breakdown by region, and takes into account the cost of stamp duty, estate agent fees and conveyancing costs.
Profit from moving from four-bed to two-bed property
Source: Office for National Statistics. All of these figures are based on average property prices and assume you’ll be paying in cash (ie without a mortgage). We’ve also excluded the cost of a home survey and the cost of moving.
Unsurprisingly, given the premium associated with the capital, London movers could make the most in pure cash terms. They could release as much as £414,000 by moving from a four-bedroom to a two-bedroom property.
However, taking a proportional look paints a different picture. Movers in the capital would only get back 46% of the overall value of their four-bedroom home – the lowest of any region and an indictment of London’s arguably overheated property market.
Conversely, downsizers in the North East could potentially unlock some 56% of their four-bedroom home’s value.
- Find out more: What's happening to house prices?
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Sign up nowWhat if you move to a different part of the country?
We’ve also run the numbers for those who want a change of scenery by downsizing to a different region.
Anyone moving from the capital to the North East could unlock a hefty £771,097 (85% of their property’s overall value), while Londoners dreaming of moving to Scotland could make £738,341 after costs.
For those keen on moving up the coast, downsizing from the South East to the North East could unlock £462,763, while going from the South West to North West could make £283,586.
| London to North East | £904,778 | £118,795 | £771,097 |
| London to Northern Ireland | £904,778 | £127,302 | £762,590 |
| London to Scotland | £904,778 | £151,423 | £738,341 |
| South East to North East | £592,002 | £118,795 | £462,763 |
| South West to North West | £447,606 | £155,626 | £283,586 |
| North West to South West | £345,730 | £226,961 | £111,822 |
| North East to South West | £284,736 | £226,961 | £51,694 |
Source: Office for National Statistics. All of these figures are based on average property prices and assume you’ll be paying in cash (ie without a mortgage). We’ve also excluded the cost of a home survey and the cost of moving.
The cost of downsizing
Moving home is no small task. Most obviously, it's time consuming: it could take anywhere from six to 12 months, says David Fell.
Then there are the costs. If you appoint an estate agent to market your home, you’ll incur agent fees. These are usually charged as a percentage of your property’s sale price.
The Homeowners Alliance says the average estate agent fee in England and Wales is 1.42% including VAT.
You may also have to pay stamp duty on your new home. In England and Northern Ireland you’ll pay 0% on the first £250,000, then 5% on the amount up to £925,000, 10% on up to £1.5m, and 12% on anything above that. You can use our stamp duty calculator to work out how much you'll pay.
Buying elsewhere in the UK? Check out our guides on Scottish stamp duty (LBTT) and Welsh stamp duty (LTT).
You’ll also need to appoint a conveyancer to deal with the legal aspects of moving. Data from price comparison site Reallymoving shows the average cost of conveyancing for home movers was £2,038 in 2023.
Plus you can typically expect to pay between £500 and £1,000 to get your new property checked for issues by a professional surveyor – although, depending on location and the comprehensiveness of the survey, it can cost considerably more.
Key questions to ask yourself
What’s the best location? This might be an easy decision if you want to stay local or be near family. But if you’re tempted to try somewhere new, check our guide on the best places to retire in the UK.
Working out how much you want to spend should reflect both how you’ll use your new home – such as if you want friends and family to be able to stay – and how much money you wish to release.
If you’re looking to pass on money, unlocking value from property earlier means you can take advantage of annual tax-free gifting and ‘potentially exempt transfers’. You can give gifts of any size free of inheritance tax if you do so at least seven years before your death.
Don’t ignore retirement villages. There can be a good sense of community, and there’s often help on hand should you need it.
But properties can be expensive, and look out for service fees and other 'event fees' which might apply if you sell the property.
- Find out more: the best places to retire in the UK
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