Many strive to accumulate wealth throughout their lives via ‘trading up’ to larger and more valuable properties.  Once they are ‘winding down’ towards retirement, down valuing (and usually downsizing) for many may seem like the next logical step throughout their life cycle, and here are some things to consider if you are in this boat.


First off, an incentive of down valuing is to release capital.  Your home is generally your highest value asset.  A common expression is that a lot of people are asset rich and cash poor and for many homeowners this is likely the case.  You may be viewed as wealthy on paper but all your wealth is tied up in your property, all your life you have worked hard accumulating wealth but at the time you want to use that wealth, i.e. in retirement, you can not easily access it.  Releasing that capital can be used for an abundance of things including; funding the life experiences you have always wanted, helping out a relative through education, and perhaps most ‘boring’ but most important helping fund your income in retirement.  State pension provisions are not sufficient to fund a high quality lifestyle in retirement so using some equity from your property to assist your income in retirement will likely be beneficial for most.


Downsizing to a smaller property will more than likely mean that your running costs for the house will be lower.  Be that your monthly household bills, i.e. utilities, or the general maintenance of the property.  With less money committed to these household expenses and maintenance you will have more disposable income.


On the other hand there are potential drawbacks to down valuing / downsizing.  Your property may have been your long term family home.  You may have made many memories there and you may be attached to the property that you would be affected if you no longer owned it.  Also there are costs associated with downsizing such as estate agents fees, solicitor’s fees, moving costs and stamp duty costs to consider before taking the big step.


There are lots of reasons to look at down valuing / downsizing, however don’t just do it for the sake of it.  There is a reason the saying ‘you can’t put a price on happiness’ exists.  Don’t be drawn in solely by the appeal of a large amount of capital, make sure you have thought about it thoroughly and you are moving to a home and not just a house.


Daniel Brown BSc (Hons), Cert SMP

2nd January 2018

Reasons to Downsize