Empty nesters could see a boost to their bank accounts if they downsize, according to recent data that indicates homeowners of five-bedroom properties could unlock half a million in cash if they trade in for a three bedroomed property instead.
New analysis from the UK property website Rightmove reveals cash-equity release opportunities for those ready to downsize to a smaller home, before moving costs such as stamp duty and conveyancing.
On average, larger property homeowners outside of London could release £498,687 in cash by downsizing from a five-bedroom to a three-bedroom house, based on the current average asking price for these types of properties.
Tim Bannister, Rightmove’s property expert, says: “Downsizing is a sensitive topic for many homeowners, as emotional ties and the inconvenience of moving often deter them from selling their family homes. However, empty nesters may overlook the significant benefits of downsizing, such as reduced energy bills and increased cash from purchasing a smaller home, that can still cover moving costs with leftover returns. By transitioning from a five-bedroom to a three-bedroom house, homeowners could still retain spare bedrooms for guests and free up on average half a million in cash for other uses before moving costs.”
Five-bedroom properties have seen substantial price growth over the past decade. Homeowners who purchased their properties in 2014 have experienced on average a 36 per cent increase in the value of their property.
London movers who own outright could release the most in pure cash terms due to the higher expense of housing in the capital, with potential equity release reaching as much as £1,062,087.
Potential movers from the North East gain the most proportionally, recouping 65% of their five-bedroom property value, the highest percentage of any region. At the lowest end of the regional scale, downsizers in the East Midlands, South West and East of England could unlock 58 per cent of their five-bedroom property value, still a significant cash return.
Not only could the release of cash from a home be a motivator for an empty nester to downsize, but so too could the substantial savings on energy bills.
Rightmove analysis shows that downsizing from a five-bedroom less energy efficient EPC E rated house, to a three-bed more energy efficient EPC C rated house could save homeowners an average of £3,806 a year in energy bills.
If 150,000 larger households made this move, over half a billion pounds a year could be saved by these downsizers in energy costs for them to potentially spend elsewhere.
James Linder, Regional Sales Director, Leaders Romans Group, says: “We’ve observed a trend in downsizing among homeowners, particularly in towns with family homes and larger urban areas. Many people are downsizing to release equity, often using the substantial cash returns to help their children get onto the property ladder. Additionally, the potential savings on energy bills, council tax, and maintenance costs are considerable. Moving can save homeowners a significant amount annually in energy costs alone. Lower council tax and reduced upkeep expenses further enhance the appeal of downsizing.
“We are also witnessing a demographic shift, with more individuals in their 60s opting to downsize, compared to the traditional age range of 70-80. This younger group is proactive in securing their financial future and reducing their monthly costs.”
Regions and average potential cash return from downsizing
| Region |
Average asking price 5-bed house |
Average asking price 3-bed house |
% difference in asking prices |
Average cash return |
| North East | £520,873 | £181,448 | -65% | £339,425 |
| North West | £671,644 | £244,200 | -64% | £427,444 |
| Yorkshire and The Humber | £611,725 | £228,650 | -63% | £383,075 |
| London | £1,697,236 | £635,149 | -63% | £1,062,087 |
| UK excluding London | £805,804 | £307,117 | -62% | £498,687 |
| Scotland | £543,476 | £214,966 | -60% | £328,510 |
| South East | £1,089,597 | £438,890 | -60% | £650,707 |
| West Midlands | £679,449 | £276,358 | -59% | £403,091 |
| Wales | £574,934 | £237,440 | -59% | £337,494 |
| East Midlands | £617,709 | £258,071 | -58% | £359,638 |
| South West | £846,630 | £356,071 | -58% | £490,559 |
