Downsizing Your House – A Complete Guide

Pros and Cons of Downsizing your Home 

Whatever your reason for downsizing, and whenever you choose to downsize, there will always be pros and cons. The trick is making sure that the pros outweigh the cons. We’ve briefly covered some of the most common below. 

Pros 

• Release equity. When you downsize to a smaller or cheaper home, you release equity by selling your current property. This frees up cash for you to do with what you please. You could see the world, give the money to your family, top up your savings pot, or carry out some refurbishment on your new property and turn it into your dream home. 
• Lower Bills. Smaller properties usually have cheaper running costs. Downsizing can mean that you benefit from lower monthly outgoings as a result. 
• More manageable. A smaller space is much more manageable, particularly if you’re in later life. Having fewer things to focus on means that you’ll likely do things to a higher standard, making it easier for you to add value to your new home. 
• Reduced consumption. Reducing your consumption as a result of downsizing stretches beyond just energy consumption. Less space means that you’re less likely to fill your house with things that you don’t necessarily need. You’ll save money on furnishings and nik naks. 

Cons 

• Less space. It’s an obvious one, but downsizing means that you’ll have less indoor space. This can feel a little bit cramped at first, particularly if there are a few of you living in the same property, so it will require some getting used to. 
• Room for entertaining. If you’re used to hosting guests or family over the festive season, it may prove difficult in a smaller house. Keep this in mind as a restriction. Family members may have to stay in a hotel when they come to visit. 
• Lifestyle change. If you’ve lived in a large house for many years then it can be hard to adjust to living in a smaller space. Changing lifestyle can be difficult, as people are naturally resistant to change. 
• Moving costs. As with all house moves there is the cost of selling your house. There’s also the cost of moving and buying your new house: stamp duty, conveyancing fees, it all stacks up. Make sure you’ve budgeted for the move and don’t get caught off guard by the costs. 

Downsizing and Inheritance Tax 

The standard inheritance tax allowance is £325,000. If you own a home and leave it in your will, you are entitled to an additional £175,000 tax free allowance. Homeowners who are considering downsizing to a property below this threshold may be concerned about losing out on this tax free amount. However, a ‘downsizing addition’ can be applied to the estate to make sure it benefits from the full amount. Speak to a professional to understand the rules completely, as they are quite complex. You can check out some basic calculators on Gov.uk to understand if you’ll qualify.

Conclusion

To conclude, downsizing is making the move to a smaller or cheaper property, and is typically done by those who are looking to make their situation more manageable. There are a number of reasons why people would choose to downsize, from releasing funds for retirement to moving abroad. Regardless of the reason, there are several pros and cons to downsizing that we’ve mentioned in detail throughout this article. 

If you’ve found the perfect property to downsize to and want to sell your house fast, consider selling your property to SmoothSale. We operate as a cash house buyer, and can guarantee to buy your house in a timeline that suits your onward plans. If you’re worried about the condition of your property, you needn’t be. We buy any house in any condition, so why not get in touch with us today? Give us a call on 0800 368 8952 and find out how we can help.