After a lifetime spent working towards property investments, it might at first seem counterintuitive to think about downsizing houses.
But, for many property owners, downsizing offers a wide range of key benefits, which can help them to enjoy a higher quality of life.
Below, we’ve shared a guide to the pros and cons of downsizing houses, to help you weigh up the factors involved in this decision, and see if it offers the best step for you.
What is the best age to downsize your home?
In reality, people may decide to downsize their house for a whole host of different reasons.
The question of, ‘When should I downsize my house?’ has no one simple answer.
Although there is absolutely no one-size-fits-all answer, the best age to downsize your home could be:
- When you retire – to reduce the expenses associated with your property, and access more money to spend on other things during your retirement.
- When your children move out – and you don’t have any need for the extra space.
- If you’re struggling to manage your home – if you’re finding chores and home maintenance more challenging.
- If you’re experiencing health or mobility issues – and a smaller home would be easier and more enjoyable to live in.
- If you’re hoping to move to a more expensive location – and downsizing would give you the opportunity to do so.
- If you’re feeling lonely – and downsizing would give you the opportunity to be closer to your loved ones.
What are the advantages of downsizing a house?
With less space, comes a number of valuable perks.
Downsizing a house unlocks numerous key benefits, particularly for people who are older, or would struggle to live on their own independently.
So, to give you a sense of why downsizing might be a good path to take, here are some of the main advantages of downsizing houses:
- Releasing cash – this could take one of two forms. Firstly, by spending less money on your mortgage, you will find that you have more money at your disposal every month. Or secondly, if you buy your smaller home from the proceeds of your house sale, this will free up the difference for you. This money could be used for other investments, boost your financial security, or to simply tick off some items on your bucket list. An added bonus here too is that as well as releasing money from a larger build, you can add value to the property buy building a granny annexe on its property.
- Reducing bills – in the majority of cases, you’ll find that the financial savings also extend to lower monthly bills costs. Smaller homes require less energy to heat and electricity to light, meaning your monthly utility bills will be cheaper.
- Improving accessibility – smaller homes (particularly bungalows) are usually far more accessible. This makes them easier for older people and people with reduced mobility to use and enjoy.
- Open up opportunities for new locations – by downsizing, you can use the money that you are saving to explore new locations, where you may not have otherwise had the opportunity to live. Critically, this could also mean being closer to your loved ones.
- Tick some items off your bucket list – if you are able to use this extra money to spend on yourself, it can give you the freedom to have some wonderful adventures. If you’re at retirement age, this extra money could be used for a blissful, action-packed retirement.
- Less time spent on chores – since smaller homes have less rooms, you’ll find that your chores and general maintenance requirements will be markedly lower. Everyone can enjoy the benefits of this, but this will be particularly rewarding for older people, who may be finding these tasks to be more challenging.
- Less stressful! – all the advantages listed above translate into less stress. All the most common worries that homeowners face (mortgages, energy bills, chores and home management) are all eased by downsizing.
What are the disadvantages of downsizing a house?
As with any move, there are also a number of potential disadvantages to this approach, which you will need to consider carefully.
The most common disadvantages that property owners face when downsizing houses include:
- If you have a strong emotional attachment to your existing home, you may find it difficult to leave
- Struggling with reduced living and storage spaces
- The costs of moving house (more on this below)
- Finding a smaller house that still ticks all your boxes
- Adjusting your lifestyle and daily routine
- Leaving behind your old community, and being further away from any loved ones that lived nearby
Although you might not experience all of these disadvantages, it is important to weigh these up as you debate the decision to downsize.
You may also find that enlisting the assistance of a financial advisor helps you to make the best decision for you.
Do I pay tax if I downsize my house?
Even if you’re downsizing your house, you’ll still have to cover the usual costs that come with moving house.
These usually include (depending on the specific conditions of your move) stamp duty land tax and capital gains tax, as well as solicitors fees, conveyancing fees, estate agent fees and surveys.
So yes, you will need to pay tax if you downsize your house. You’ll need to balance these costs against the money that is freed up by the lower cost of your new house.
If you want to get a more accurate estimation of how much tax you will have to pay when you move, you can arrange a consultation with a tax advisor.
What are the benefits of downsizing houses to a granny annexe?
One of the most common forms that downsizing the home takes is moving into a granny annexe.
We spoke earlier about how the best age to downsize is often your later years, when living independently becomes more challenging. But, someone of any age may decide to invest in an annexe.
Downsizing to an annexe opens up an even longer list of benefits, which is why it is an option that is rapidly increasing in popularity.
The key additional advantages of downsizing to an annexe include being closer to your loved ones. With an annexe, you can spend more time with your family and be a part of each others’ daily lives. But, at the same time, annexes are designed so that you can still retain your independence.
You can live in a property that has all of its own utilities and is completely private, while still being close enough to your family to have their regular support and company. If you are an older person, or someone with reduced mobility, then this is invaluable.
If you do need at-home care and daily assistance, then the arrangement of an annexe will make this caregiving easier for both parties. This is particularly beneficial if you can mostly live independently, but just need help with a few tasks, here and there. Your family or loved ones are just a few metres away!
Particularly amongst elderly people, loneliness in the UK is a huge cause for concern. In fact, according to Age UK, 1.4 million older people in the UK are often lonely. Annexes, as they enable people to live so much closer to their loved ones, are a fantastic way to support the emotional wellbeing of people living on their own.
If you would like to find out more about the benefits of annexes, or for personal guidance about how to downsize your home to an annexe, the iHus team are here to help. We have constructed over 500 builds and supported many families through the process. When you need advice, contact us and we’ll be delighted to help you understand the benefits of granny annexe living.