Downsizing is moving from a larger or more expensive property to a smaller or cheaper one. According to data from property website reallymoving.com, around a quarter of all house moves in the UK involve downsizing—and the figure is slightly higher in the south east of the country. Downsizing may be particularly appealing as you get older, as a way to reduce your costs, free up equity, or simply live in a house that better suits your needs.

Many people, however, do not wish to move on retirement or later. They like living in the house in which they brought up their family, and have no wish to move. This decision is fine—until it isn’t fine any longer. If your circumstances force a move, that can be difficult to manage both physically and emotionally. This page discusses making housing decisions before they become urgent.

Why Do People Choose to Downsize?

There are many reasons why you might choose to downsize. They include:

• Moving to a house that better suits your needs. Your needs can change in many ways as you get older. You might want to be nearer to shops or facilities, or have fewer stairs or less space to keep clean. You might also want to be nearer to family members, or live somewhere with a warden, especially if you live alone.

• Financial reasons. There are two main options: to free up equity from your house and/or to reduce your living costs. The two may not be mutually exclusive: freeing up equity can mean that you can help family members to buy their own property, but it might also give you a sum of money to draw on to meet your living costs.

• Reducing the maintenance requirements. Many people choose to move to a smaller or newer house with a view to reducing the maintenance required. There is much less cleaning and ‘looking after’ with a smaller house.

• Emotional reasons. Many people find that they want to move when their partner dies. They may love their home, but they don’t like living there alone.

These are all good reasons for considering downsizing—and other people may have other reasons for considering it. However, there are also some potential disadvantages.

What are the Disadvantages of Downsizing?

The disadvantages of downsizing might also be considered the reasons why people choose not to do it. They include:

• Emotional reasons. Just as downsizing may be driven by emotion, so may not downsizing. It can be difficult to decide to move out of a family home that you have occupied for many years. It can be even harder if you have recently lost your partner, and your memories are all bound up in the house.

• Concerns about space. Downsizing, by definition, is about moving to a smaller house. Many people are concerned that they will not have enough space, or will have to get rid of a lot of their belongings. It is especially hard if you want family members to be able to come and stay, or if you have a hobby that requires space. Small houses also often have less garage and storage space, which may put people off.

• Not finding the right house. The UK’s HomeOwners Alliance found that around a third of people over 55 who had considered moving and then not done so cited a lack of suitable properties as the reason. However, there are many reasons why people fail to find the right property, and not all of them are practical.

• The cost of moving. The HomeOwners Alliance also found that many people are put off by the cost of moving, especially if they had no very strong reason to move.

When is the Right Time to Downsize?

There is no one right time to downsize.

This is very much an issue where one size does not fit all. Consider the responses to a question about this issue on the Mumsnet forum.

It is clear from these responses that some people downsize (or plan to downsize) on retirement. Others wait, and others do not plan ever to move again.

However, it is also clear from the responses that this is an issue that is much considered. It is certainly not left to chance.

The tone of the responses of those who have downsized or plan to do so is that they do not want to be caught out by circumstances. What is suitable for a couple can be highly unsuitable when you are on your own, or if you have a fall or illness.

When Should You Consider Downsizing?

The real question, then, is not so much “When is the right time to downsize?” as “When should you consider whether to downsize?”.

The answer to that seems to be “regularly”.

As our page on Financial Planning for Retirement makes clear, financial planning does not stop on retirement. You should review your situation every year to ensure that your pension is still sufficient to meet your needs. This is probably a good time to also review the idea of downsizing. Think about whether:

• Your house still meets your needs;

• You still enjoy living there;

• You are starting to find your house “too much” or a concern—in terms of space, maintenance or simply moving about;

• You might want to move to a different place, for example to be nearer family; and

• You want or need additional money to meet your living costs.

The answers to any of these issues might be a trigger to consider downsizing.

What are the Alternatives to Downsizing?

What about if you really don’t want to downsize, but one or more of the issues above is pressing?

There may be solutions that would address the problem without requiring you to move:

• If you need to free up money, you might consider equity release (although this has implications, and you should obtain good, reliable financial advice before embarking on this course);

• If you want to live in a smaller space, or would like to avoid stairs, you may be able to adapt your house to fit your needs. For example, you could fit a stairlift, or put in a downstairs bathroom. This might be cheaper than moving, once all the costs are taken into account;

• If you want to be nearer family, your family might move towards you. This may be particularly pertinent if you live in an area with a low cost of living, and/or they can work remotely. You might even consider dividing the house so your family could live in part of it. This may have tax and other financial implications, however, so you should always get financial advice first.

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Conclusion

Downsizing can be an obvious solution to a problem—but it can also be a challenging and emotional decision.

There is no ‘right time’ to do it that works for everyone. However, it is very definitely an option that should be considered periodically both before and during retirement, as a way to ensure that you don’t get caught out by circumstances.

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