One noticeable effect of the cost of living crisis is the apparent increase in the number of people downsizing. Why are moves looking for smaller homes, and what benefits does it offer those hoping to reduce their cost of living?
Have more movers been downsizing?
Downsizing – moving into a smaller and, usually, cheaper home – is on the rise. While there has always been a certain proportion of movers seeking a smaller home, there is a noticeable trend upwards in the number of people relocating to smaller properties.
Analysis of user activity on reallymoving.com found the proportion of users looking to downsize rose by 41% between January and December 2022. Downsizers comprised 17% of all home movers in January 2022, rising steadily throughout the year to account for 24% of all home moves by December, based on data from approximately 55,000 conveyancing registrations.
Why are people downsizing?
In the face of the cost of living crisis, downsizing serves the dual purpose of releasing equity in the property and reducing home running costs.
‘Heating and maintaining a large home and garden is time-consuming and expensive, so understandably people are looking for ways to reduce their bills and free up some capital, bringing forward plans to downsize sooner than they otherwise might have.’ – Rob Houghton, Chief Executive of Really Moving
It’s apparent that the rising cost of living is a major concern for most people, with 86% of those surveyed reporting they’re concerned about day-to-day living costs. These concerns are driving a move to smaller, more affordable to-run properties. As early as April last year, Purple Bricks reported 60% of people downsizing were doing so to reduce bills.
How does downsizing help fight the rising cost of living?
One of the main areas smaller homes win out over larger properties is the fact that less energy is required to power them. Fewer rooms to heat and light and fewer thirsty appliances mean lower gas and electric bills for the occupants. According to British Gas, at current energy prices, a three-bedroom property pays an average of £993 a year less for energy than a five-bedroom home.
Smaller properties are also often in lower Council Tax bands, meaning lower annual charges. Going down a single Council Tax band (From E to D) would save you an average of £436.85 based on 2022 charges. Be warned though – Council tax banding is based on property value rather than size, so a smaller home in a more expensive area could pay more.
It may be less concrete, but downsizers are also likely to see a decrease in spending on regular costs like cleaning suppliers and home maintenance. As a rule of thumb, home repairs and maintenance are expected to cost around 1% of a property’s value each year, with smaller properties being more affordable to manage.
Are there alternatives to beat the cost of living crisis?
Rather than downsizing, some movers are looking for more energy-efficient properties. The trend is clear in the rise of demand for ecologically sound properties. According to Rightmove Green Home Report 2022, improving the energy efficiency rating of a property from an F to a C could add an additional 16% to a property’s value.
The motivations are generally the same as moving to a smaller home, with less energy waste means lower bills for gas and electricity. An energy-efficient move doesn’t necessarily provide all of the opportunities as downsizing, as if the value of the new property is the same the Council Tax will bill will be similar.
Otherwise, there are ways to make your current home more energy efficient whether you own or rent your property. With energy prices remaining high, it’s a good time to invest in energy-saving home upgrades.
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