Scottish downsizers benefit from £100k windfall

Those planning to move from a detached properly to a bungalow could raise an average of £66,000.

For those trading down, the potential amount that can be raised by downsizing from a detached property to a bungalow has risen by 14 per cent (or £8,365) over the past decade; a downsizer today would receive an average of £66,190; compared with £57,825 in 2005. The UK average growth is 2 per cent (or £1,616), allowing Scots to realise a greater benefit from the move.

The potential amount of cash Scottish homeowners could raise by downsizing their property from a detached home to a semi-detached stood at an average of £100,778 in 2015; an increase of 12 per cent (£10,469) since 2005.

While Scots will be pleased to see a double digit percentage increase in windfall over 10 years, home owners in the South West of England and East Anglia have seen even high percentage increases over the decade.

Across the UK, downsizing is the most popular reason for people looking to move to a new home in the next three years, with 46 per cent of those surveyed citing that as a reason.

The main reason people cited for downsizing was to move somewhere which better served their circumstances (53 per cent). Other reasons given were to reduce bills or free up equity (both 39 per cent), or to provide extra cash for retirement (31 per cent).

The average age for a downsizer was 53 and the largest proportion (37 per cent) had lived in their current property between 11 and 20 years and had moved into that property at the age of 39.

A fifth said that they were downsizing earlier than they had anticipated, citing reasons such as health, changes in relationship status and need to be closer to better local amenities. A third also said that they were planning to move to a more affordable area.

Three quarters of those downsizing said they expected to profit from their move, with 35 per cent saying that they planned to reinvest their additional capital in a new property. 29 per cent said that they would invest in other financial products, whilst only one in five (21 per cent) planned to invest in their pension or pass the earnings on to their family.

Nicola Noble, Bank of Scotland’s mortgage director, said: “Double digit percentage growth in windfall over a decade is great news for Scots considering downsizing. It’s interesting to see that a large proportion of downsizers are planning to reinvest the profits from trading down into a new property, rather than pensions or other financial products.”

“Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties for younger families who may be about to take their next step up the ladder.”