Phil Spencer: Downsizing isn’t just for retirees – how to do it successfully

The property ladder is a great metaphor. Everyone understands it, and the image it evokes – of someone clambering cautiously from rung to rung – captures well what the home ownership journey feels like.

There’s just one snag – it implies the only valid direction is up. This is why people often use “move up” and “move” interchangeably, and why those of us who like to spend rainy Sunday afternoons scrolling through property portals may be subconsciously thinking “bigger is better”.

But as with an actual ladder, there’s a time when you need to come down, rather than go up.

Why some people are downsizing earlier

Downsizing isn’t new, but what is new is the age at which people do it. Previously, parents rarely moved somewhere smaller until they were well into retirement, perhaps decades after their children had left home.

These days many downsizers move the minute the nest is empty.

Two powerful financial factors lie behind this shift – the Bank of Mum and Dad and inheritance tax planning.

By selling up and moving somewhere cheaper, parents can release equity which they can then gift to their children, helping their offspring onto the property ladder now and potentially saving them IHT in the future.

While keeping the family home has obvious emotional appeal, grown-up children may value help with a deposit for their own home more than the chance to stay in their childhood bedroom for a few days at Christmas.

For other downsizers, the financial imperative is more personal and pressing – the need to release equity to boost their own pension income.

This is especially true for older Gen Xs – those approaching 60 now – who were too young to have a generous defined benefit pension, which guarantees an income for life, like their Baby Boomer parents did. Many of them regard their property as their pension.

There are lifestyle reasons too. Since the pandemic, there has been an increase in younger downsizers swapping the former family home in the suburbs or countryside for a low-maintenance townhouse in the city, where they can enjoy bright lights, theatres and restaurants without the need for so many bedrooms.

Planning on downsizing? Here’s what to do

Whatever your motivation, downsizing is probably going to be unlike any move you’ve made before.

So start thinking early about what you’ll do with the items you can’t take with you. Do you put them into storage, give them to family or friends, or sell them?

While the prospect of leaving a home full of memories, or reducing your number of possessions, can feel a wrench – never lose sight of the bigger picture.

Remember why you’re downsizing and look at it as a chance to reset and start a new chapter in your life.

If you’ve not moved for a while, get ready for the market as it is today, not as it was. In many areas, sellers outnumber buyers – so it may take longer to sell your current home than you realise.

Be sensible with your asking price, and try to wait until your home is under offer before you fall in love with somewhere else.

Downsizers who last moved years or even decades ago often underestimate the cost of moving now. Stamp duty – paid when you buy a home – is a key expense to factor in, but remember to also budget for legal fees, removal costs and any renovations or upgrades needed at the new property.

Deciding the right size home is a personal choice, but try to balance your present needs with future flexibility. Think beyond square footage to consider how you will actually use rooms; multi-functional spaces are better than guest bedrooms you rarely use.

If you prioritise functionality and layout over sheer size, a well-designed, two-bedroom property can outshine a sprawling four-bedroom home in both comfort and efficiency.

Once your children have flown the nest, you’re past worrying about school catchment areas. But use your carte blanche on location wisely.

Think about proximity to family and friends, as well as healthcare facilities, leisure and culture. Walkability, good transport links and nearby shops are important practical considerations, and the ideal location should balance tranquillity with convenience, making your daily life easy while also offering a rich and fulfilling lifestyle.

Downsizing doesn’t have to mean less space

Downsizing needn’t mean sacrificing space either.

There are plenty of downsizers in their sixties opting to sell a London home for somewhere the same size in the heart of a regional city, a move that gives them a similar standard of living and number of bedrooms, but drops a chunk of equity into their pocket to spend or invest as they wish.

In the game Snakes and Ladders, the ladders only go up. And as anyone who has got stuck up an actual ladder will tell you, coming down can be harder than climbing it. But it doesn’t have to be like this on the property ladder.

Downsizing is an emotional and difficult move, for sure. So when the time is right for you, it helps to think of it as “rightsizing” – and a chance to embrace a home that complements a new phase in your life rather than being a relic of a past one.

Phil Spencer is a property expert and co-presenter of Channel 4 show Location, Location, Location. He is also the founder of Move IQ.

المصدر: iNews