A quarter of UK homeowners want to downsize when they retire, but 22% say that the cost of downsizing will make it impossible. Downsizing means moving to a smaller property, usually to save money, so it seems counter-intuitive that it could be too expensive.
However, the multiple costs associated with moving, selling and buying a new home means that the savings might not actually be worthwhile. As you plan your move, be sure to consider all the factors that add to the cost of downsizing to be sure you’re making the right choice for your home and your finances.
What are the advantages of downsizing?
Downsizing your home refers to moving to a smaller, cheaper property. While there are a few reasons you might downsize, reducing your cost of living is usually the biggest one. Downsizing offers multiple potential savings including:
- Moving to a lower-value property means lower mortgage or rent payments
- Selling a home you own outright and moving to a cheaper property releases equity
- Smaller properties have lower running costs and bills
- Moving to a new area can reduce the cost of everything from Council Tax to groceries
- Moving to an area with better public transport or a more walkable neighbourhood lets some households downsize to one car, or give up their cars entirely
- Smaller properties require less maintenance, saving time and money if you currently pay for a cleaner
Expenses that add to the cost of downsizing
Downsizing your home offers the chance to save, but the cost of downsizing can be surprisingly high. Before you decide that moving to a smaller property is the right solution to you, make sure to factor in all these potential expenses that come with the move.
| Â Downsizing Expense | Expected Cost |
| Conveyancing | £2,000 |
| Surveying | £500-£1000 |
| Mortgage Fees | £1000+ for early repayment and a new mortgage |
| Stamp Duty | £0 – £20,000+ |
| Estate Agent Fees | 1.42% of the property value |
| Removals | £1,304 on average for a 3-bedroom home |
Do I need to pay stamp duty when I downsize my home?
Yes, you must still pay stamp duty when you are downsizing. While there is an ongoing campaign to relieve stamp duty for those moving to smaller properties, currently it still applies.
In fact, more downsizers are likely to be paying stamp duty from April 2025. This is because the ‘nil threshold’, the value of a property for which you do not pay stamp duty, is being halved to £125,000. Many cheaper homes previously exempted from stamp duty will now be subject to a duty of at least 2%.
Moving home is expensive
Moving home is expensive in any circumstance, and the cost of removals when you’re downsizing is no different. Removals for an average three-bedroom home cost £1,304 in the UK this year.
If you’re looking to keep costs low, look out for these unexpected costs when moving home that can add to your bill.
Is now the right time to downsize?
Downsizing offers an ongoing financial benefit at the price of a number of upfront expenses. It’s crucial to weigh the potential reduction in the cost of living against the payments you’ll be expected to make to be sure it’s the right decision for you and your household.
Just as important is to make sure you are downsizing at the right time. As mortgage expert Karen Noye of the wealth management firm Quilter puts it, ‘Your house is typically your most valuable asset, and leveraging the equity in it and downsizing when you get to retirement rather than downsizing early can be a crucial element of your retirement provision. Therefore, pressing the downsizing button too early in your life if it’s not absolutely necessary can make you worse off financially in the long run.’
When deciding to downsize, don’t just look at the potential savings now but also whether it would be more prudent to continue building equity in your current property until you need to release it later in life.
