Empty nesters across the country who are living in oversized, detached properties could release more than £100,000 by selling up and moving to a bungalow – and maybe reap the rewards from property investment.
Almost half of over-55s are continuing to live in large, family homes after their children have flown the nest and are not considering downsizing, according to research by Lloyds, with many citing the main reason as being their strong bond with the area, as well as being financially comfortable enough to stay put.
However, the study also looked at price differences across various property types, and discovered that while the average detached home is worth £360,000, bungalows are priced at around £250,000 – as of March 2018 – meaning that some households could net themselves £110,000 by moving.
Factors to consider
In the south-east of the country, the price difference between a detached home and a bungalow is a huge £275,000, compared to London where the windfall would amount to just £54,780 – and homeowners in the north-west, East Midlands and Scotland could stand to make £80,000-£90,000 by downsizing.
One issue with downsizing, though, is a lack of available, suitable properties for older people. Bungalows make up just 10% of the housing stock in the UK, according to the English Housing Survey, and they tend not to be evenly spread with some areas having huge concentrations and others having none.
What could you do with all the extra cash?
However, one option for downsizers, which has become more popular in recent years, is to move into a new-build. They are not only much easier to come by due to rapid housing stock expansion in the UK, but also offer huge potential savings in terms of energy bills and minimal maintenance costs. Many are also now being developed with a number of in-built amenities including communal areas, meaning they can be a great option for over-55s who want to be part of a mixed community.
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As cash savings still generate very limited interest, many will be reluctant to release cash from their homes without investing it elsewhere – and property is still generally considered the top place for your money to be in terms of capital gains and future returns. Therefore, downsizers could also look at reinvesting their cash into an investment property, providing added security for the future.
There are, of course, a range of factors to consider when looking at investing in property, including stamp duty, estate agent fees and conveyancing fees, but many will still find this an attractive option – particularly in emerging, up-and-coming parts of the country where house prices are predicted to soar over the next five years, such as Manchester and Birmingham.