Homeowners Demand Six-Figure Profit to Downsize, Study Finds

Homeowners considering downsizing their properties would need to see a profit of at least £108,000 for the move to be financially worthwhile, according to new findings. The study also revealed that a significant majority of homeowners are not open to the idea of downsizing at all, with 53 percent expressing no intention of doing so.

Barclays, which conducted the research, noted that potential downsizers face numerous barriers, including the emotional upheaval of leaving a long-term home and substantial upfront costs. These expenses encompass stamp duty, legal fees, and removal costs.

"Not only are costs themselves a barrier, but the homeowners surveyed also had high expectations about the money they would need to unlock to consider downsizing financially worthwhile," Barclays stated.

While downsizing can lead to significant profits, particularly in high-value areas, the financial benefits are often offset by these associated expenses. Data from consumer group Which? in 2024 indicated that London movers could potentially unlock as much as £414,000 by moving from a four-bedroom to a two-bedroom property. However, the percentage profit can be more substantial in other regions. In the north east of England, for example, homeowners could recoup up to 56 percent of their home’s value by transitioning from a £294,736 four-bedroom house to a £118,795 two-bedroom property.

Financial Hurdles to Downsizing

Stamp duty emerged as a primary deterrent, cited by 27 percent of homeowners surveyed as the most off-putting upfront cost. Barclays highlighted stamp duty as a "particularly acute barrier" and suggested that government review of the tax could help unlock downsizing.

For instance, a couple selling a £500,000 home and purchasing a £300,000 property would incur a £5,000 stamp duty bill, in addition to other moving expenses. Approximately 70 percent of potential downsizers indicated that an exemption or discount on stamp duty would significantly encourage them to move sooner. This aligns with a policy pledge by Conservative leader Kemi Badenoch to abolish stamp duty.

Following stamp duty, the cost of adapting or renovating a new home was the second most cited financial concern, also at 27 percent. Moving and removal costs were also high on the list of considerations.

Housing Availability and Suitability

Beyond financial considerations, the availability of suitable housing is a major factor. Sixty-seven percent of potential downsizers stated that a larger supply of appropriate homes would encourage them to move. Similarly, 66 percent said they would be more inclined to downsize if more affordable retirement properties were accessible.

"The availability of suitable and affordable homes, including retirement and accessible housing, is important for giving those open to downsizing attractive options to move into," Barclays commented.

For those who have already downsized, the primary use of the remaining funds was to create a financial safety net or savings buffer, as reported by 47 percent of respondents.

Jatin Patel, head of mortgages, savings and insurance at Barclays, emphasized that downsizing offers opportunities to find suitable properties, reduce household costs, and enhance financial resilience. However, he noted that significant upfront costs and a lack of suitable housing options can make the move difficult to justify. "For many homeowners, the priority is not simply releasing the maximum amount of money. It is finding the right home, in the right place for their stage of life," Patel said. He suggested that government support to ease upfront costs and improve access to appropriate, affordable housing could convert interest into action.