Thinking of downsizing?

A guide to downsizing in retirement

A large house can feel like an unnecessary expense once children have grown-up and moved away. If you’re considering a move to a smaller property, our checklists can help.

Five reasons to downsize

  1. To save money on mortgage/rent. 
  2. To reduce the amount of cleaning and maintenance.
  3. To release equity.
  4. Due to changed family circumstances.
  5. For health or lifestyle reasons.

Questions to ask yourself

What type of property would suit you best? Depending on your age, health and support network, you might consider: sheltered accommodation, retirement villages, bungalows, flats and smaller houses. However, be aware that lifts in large blocks often break down, there are sometimes significant service charges to factor in and if you’re looking to buy a property, you may find yourself in competition with first-time buyers, so prices may be higher than you’d expect.

It can help to write down a list of your priorities. Do you want to live near your family, shops, medical facilities, countryside? Do you want to be near entertainments, schools, transport? Do you need a parking space or a garden? These are just some of the aspects you’ll need to consider.

Six decluttering tips

Moving-advice checklists always include having a big clear out before you move – but when downsizing, this takes on an even greater significance. Here are some decluttering tips to make your life easier before you even think about packing.

  1. Lay the groundwork. Before you start your clear-out, ensure you have bin bags, boxes and cleaning products to hand.
  2. Create space. You’ll need clear floor space for all the piles of things you’re going to sell, give away, recycle or bin.
  3. Get help. Wanting to keep hold of possessions with sentimental value is totally natural. However, if you’re moving to a smaller property you will need to overcome strong emotional attachments. Failing that, enlist the help of friends, neighbours or, ideally, your own grown up children who will much more ruthless.
  4. Use the ‘one-year’ rule. If something has been gathering dust and it hasn’t even crossed your mind, you’ve already proved you can live without it.
  5. Arguably, the hardest step… all the things you’ve been keeping ‘just in case’? They can go.
  6. Have you done enough? However, much you get rid of, the chances are you still won’t have enough storage space in your new, smaller, home. If you really can’t bear to part with things, you may want to consider putting things into storage.

The moving-house checklist, you’ve most likely done this before, but if it’s been a while here’s a reminder of what to do , and who to tell, when you move house:

  • Contact all utility suppliers and take readings on the day of the move. Electricity, gas, telephone and broadband suppliers will all need to know when you’re leaving the property.
  • Update your address with all financial providers, including your bank accounts, credit cards, pension company, life insurance provider, your ISAs and shares. Don’t forget HMRC and the DVLA either. With the latter, you’ll need proof of address to order an updated driving licence.
  • Don’t just update your address with your insurance provider – your buildings and contents insurance needs might have changed too and you may need to upgrade or downgrade your policy.
  • You’ll need to contact your entertainment suppliers such as Sky, Virgin, Netflix and Amazon. And don’t forget to update your TV licencing details. 
  • Before you move, ask about the location of the stopcock, gas and electricity meters, thermostat and fuse box in the new property.
  • Also ask which day bins are collected, and what the local recycling rules are.
  • Don’t forget to find out what the mobile phone reception is like in the new area for your provider and ask for any instruction manuals or warranties on electrical items.
  • When moving to a smaller property, you may find you don’t need a removal company and can rely on family, friends and a van hire. But if that’s not for you, most removal companies offer a packing and unpacking service too, which will relieve the stress of moving day.
  • Ensure all valuables are safe and keep all your important documents, like your passport and mortgage paperwork where you can easily find them.
  • Pack everything and label your boxes. Make a checklist of what’s in each box, so you don’t have to rummage around too much when trying to find a TV remote control, for example.
  • Make sure all your bills are paid (including council tax) and let work, friends and family know your new contact details. A postal re-direction will help to pick up any you’ve missed.
  • Settle in to your new home. It may not be as big, but it should be cheaper, cosier and require much less cleaning.

House-moving costs

If you’re buying a property when downsizing, the moving costs are likely to still be substantial. There are many variables, but you shouldn’t be surprised if it adds an extra £10,000 on top of the purchase price.

Stamp-duty (SDLT) is 5% of the purchase price on freehold homes over £250,000. You pay nothing on a property costing below £125,000 and 2% on homes priced between £125,000 and £250,000. In practice, this means that if you buy a house for £275,000, the SDLT you owe is calculated as follows:

  • 0% on the first £125,000 = £0
  • 2% on the next £125,000 = £2,500
  • 5% on the final £25,000 = £1,250
  • Total SDLT = £3,750

For more information, visit GOV.UK.

Estate agency fees vary between 1% of the asking price and 4%, some estate agents will be open to offers, others won’t. Remember too that some will quote their commission figure without VAT, which adds 20% and can be a sizeable omission on an already expensive property. Online-only estate agents will be considerably cheaper and charge a flat fee, but they may not have as many locals looking for properties, won’t necessarily know the area well and you’ll have to write your own sales pitch and potentially carry out your own viewings.

Estate agents will also arrange an energy performance certificate (EPC) for you at around £50.

Solicitors fees tend to be between about £800 and £1,500. You should check whether this includes searches and land registry fees.

Mortgage arrangement fees – you may be saving on your monthly payments, but if you’re buying with a mortgage, you’ll probably have a fee to pay. Lenders that offer lower rates tend to charge a higher fee. You should expect to pay at least £1,000.

Land registry registration fee is something your solicitor will usually handle. It’s tied to the sale price for freehold properties and likely to be in the hundreds, rather than thousands of pounds. More information can be found here.

More about life in retirement

See what else you need to think about as you get closer to that all-important milestone – and once you’re retired too.