Thinking of downsizing? You could be sitting on a goldmine!
Swapping your five-bedroom family home for a cosy three-bed could unlock an average of nearly £500,000 in pure cash! That’s according to new figures from Rightmove that show just how profitable downsizing can be.
Londoners are sitting on the biggest potential profits. Trading a five-bedroom house, worth an average of £1.7 million, for a three-bedroom pad at £635,149 could free up £1.1 million!
North East Offers Best Percentage Returns
While London boasts the largest cash gains, the North East takes the crown for the best percentage returns. Downsizers in this region could pocket a cool 65% of their five-bed’s value – that’s an impressive £339,425!
Here’s how much you could make by downsizing across different regions:
| Region | Average Asking Price 5-Bed House | Average Asking Price 3-Bed House | Average Cash Return |
| North East | £520,873 | £181,448 | £339,425 |
| North West | £671,644 | £244,200 | £427,444 |
| Yorkshire and The Humber | £611,725 | £228,650 | £383,075 |
| London | £1,697,236 | £635,149 | £1,062,087 |
| UK (excluding London) | £805,804 | £307,117 | £498,687 |
| Scotland | £543,476 | £214,966 | £328,510 |
| South East | £1,089,597 | £438,890 | £650,707 |
| West Midlands | £679,449 | £276,358 | £403,091 |
| Wales | £574,934 | £237,440 | £337,494 |
| East Midlands | £617,709 | £258,071 | £359,638 |
| South West | £846,630 | £356,071 | £490,559 |
Source: Rightmove
More Than Just Cash
It’s not all about the upfront cash, though! Downsizing comes with a whole host of other benefits:
- Lower energy bills: Smaller homes mean less energy consumption, putting more money back in your pocket.
- Reduced council tax: Smaller properties usually fall into lower council tax bands, resulting in welcome savings.
- Cheaper upkeep: Maintaining a smaller property is typically less expensive than managing a larger one.
A Trend on the Rise
More and more homeowners are catching on to the advantages of downsizing. James Linder, a regional sales director at Leaders Romans Group, observes, “We’ve observed a trend in downsizing… Many people are downsizing to release equity, often using the substantial cash returns to help their children get onto the property ladder.”
Important Things to Remember
- Moving costs: While the potential profits are enticing, remember to factor in the costs of moving, including stamp duty, estate agent fees, conveyancing, and removal expenses.
- Capital gains tax: Good news! You typically won’t pay capital gains tax if you’re downsizing from your main residence.