Rightsizing Revisited: Homeowners seek £100k profits from downsizing
- A new Barclays policy snapshot, Rightsizing Revisited, finds a quarter (24 per cent) of homeowners are open to downsizing
- However, seven in 10 (71 per cent) homeowners cite financial risks and upfront costs as barriers to making the change
- Homeowners say they would need to release an average of £108,516 from their property sale for downsizing to feel worthwhile
- Barclays calls on the Government to consider incentives for downsizing, including targeted financial enablers and better signposting of new developments and age-suitable housing
Barclays launches a new policy snapshot, Rightsizing Revisited, which finds that that 71 per cent of homeowners are held back from downsizing by upfront costs and financial risks. The report calls on the Government to address these issues by considering targeted incentives to help homeowners with extra space move to smaller properties, unlocking much needed capacity in the housing market.
Only one in ten (10 per cent) homeowners say they have downsized, rising to a fifth (20 per cent) amongst Baby Boomer homeowners, but just 5 per cent of Generation X. However, a quarter (24 per cent) say they are open to the move at some point.
For those yet to make the move, upfront costs are the clearest financial deterrent. More than a quarter of homeowners (27 per cent) say Stamp Duty is putting them off, while 21 per cent cite moving and removal costs, 20 per cent renovation or adaptation costs and 19 per cent legal or conveyancing fees.
Cost reduction the top enabler
Targeted financial incentives were named by homeowners as the most popular measures that could convince them to downsize. Being exempt or having some relief from Stamp Duty was the top enabler, chosen by 70 per cent of potential downsizers, followed by financial help towards moving and legal costs, chosen by 67 per cent.
There are also high expectations of the financial return when downsizing. The average amount homeowners say they would need to release from a potential sale is £108,516, rising to £115,426 among mortgage-free owners.
Where homeowners do expect to free up money, financial resilience takes priority over discretionary spending. Almost a third (32 per cent) would use the proceeds to create a financial safety net or savings buffer, while 26 per cent would set money aside for future living costs such as retirement or later life housing.
Nearly a quarter (23 per cent) would spend the money on improvements or adaptations to their new home, compared with 18 per cent who would put it towards travel, hobbies or other lifestyle spending.
Availability and suitability impacting decision
The type of property is another key driver of decision, with two-thirds of potential downsizers (67 per cent) saying they’d be more likely to move if more suitable smaller homes were built in their area. Age and accessibility are also significant factors – over a third of homeowners (36 per cent) would be likely to downsize if more bungalows were built in their area. Among Baby Boomers who have already downsized, the most common reason was to move to a property suitable for getting older (43 per cent). This was followed by their previous home being larger than needed (39 per cent) and wanting to reduce bills or overall household costs (27 per cent). A further 15 per cent moved to be closer to family or friends.
The findings follow Barclays’ previous report, Rightsizing Revolution, which identified the most ‘movable’ segments of the under-occupier market. This research highlighted that, though downsizing is not only for older homeowners, one in 10 under-occupiers (11%) – equivalent to an estimated 1.4 million households – would be motivated to downsize by the need for accessible, specialised, age-threshold housing.
Policy levers to convert interest into action
The snapshot concludes that downsizing is not simply a question of willingness. Potential movers need the right financial, practical and housing conditions to make a move feel achievable and worthwhile. Barclays is therefore calling on the Government to focus policy action for rightsizing on two areas:
- The creation of targeted financial incentive mechanisms for individuals that choose to move to a smaller home. This latest research highlights the importance of financial levers to encourage homeowners to downsize. Interventions could include government grants or vouchers for downsizers, or the ability for downsizers to ‘offset’ move costs against Stamp Duty. The Government has recently stemmed speculation about Stamp Duty reform in the upcoming 2026 Autumn Budget, but any future policy intervention would need to be cost-effective and proportionate. Incentives should be designed to maximise moves that would not have happened otherwise, rather than subsidising or rewarding ones that would have.
- Giving significant strategic planning focus to retirement and age-suitable housing infrastructure, alongside improved signposting of new developments across the UK. 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. As such, supply and planning initiatives, including those aimed at achieving the government’s 1.5 million homes target, should include appropriate provision for this type of housing.
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said: “Downsizing can give homeowners the opportunity to find a property that better suits their needs, reduce household costs and strengthen their financial resilience. However, the decision is rarely as simple as moving to a smaller home. Significant upfront costs and a shortage of suitable options can make a move difficult to justify, even for those who are open to it.”
“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. Therefore, support from the Government to ease upfront costs and improve access to more suitable and affordable homes, could help turn interest into action.”
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