Homeowners Cash In by Downsizing

Homeowners considering downsizing from a five-bedroom house to a three-bedroom property could see an average cash gain of nearly £500,000, according to recent data. The North East emerges as the region offering the highest percentage returns, with homeowners potentially retaining 65% of their home's value in cash. Rightmove property expert Tim Bannister highlighted the emotional challenges many face when contemplating such a move, noting that the benefits of downsizing, including financial savings and reduced living costs, are often overlooked. The data indicates that property values have surged by 36% since 2014, providing homeowners with a lucrative opportunity to capitalize on their investments. In the North East, for instance, homeowners could realize a return of approximately £339,425 from a five-bedroom house valued at £520,873. Other regions, such as the North West and Yorkshire and the Humber, also show promising returns, with homeowners recovering 64% and 63% of their property's value, respectively. In addition to cash gains, downsizing can lead to significant savings on energy bills and council tax. Moving from a five-bedroom home with an Energy Performance Certificate (EPC) rating of E to a three-bedroom property rated C could save homeowners an average of £3,806 annually. While capital gains tax is typically not applicable if both properties are primary residences, buyers should be aware of stamp duty and other moving costs, including estate agent fees and conveyancing expenses.