The Barclays Rightsizing Revisiting report revealed that mortgage-free homeowners wanted a higher average gain of £115,426, and many prioritised financial resilience over discretionary spending.
Around 32% of homeowners said they would use the money gained for a financial safety net or savings buffer, while 26% would put the money aside for future living costs.
Some 23% would spend the money on improving or adapting their new home, while 18% would put the money towards travel, hobbies and other lifestyle spending.
Just a tenth of respondents said they had already downsized, rising to a fifth among the Baby Boomer generation, born between 1946 and 1964.
Only 5% of Generation X respondents had downsized, but 24% were open to moving at some point.
Episode 4: New Build: Powered by Partnership podcast from Newcastle for Intermediaries
Sponsored by Newcastle for Intermediaries
What would move homeowners?
Barclays has called on the government to address these issues with incentives to downsize to free up larger homes.
When asked about the barriers to downsizing, 71% of homeowners said the upfront costs and financial risks of downsizing were a deterrent, with stamp duty being the most common response, cited by 27% of respondents.
A further 21% said moving and removal costs put them off from downsizing, while a fifth pointed to renovation or adaptation costs. Some 19% said legal and conveyancing fees were a barrier to downsizing.
Some 70% of homeowners said being exempt or receiving some relief from stamp duty would encourage them to downsize, while 67% chose financial support towards moving and legal costs.
Accessible, specialised homes needed
The type of property available to move into also drove decisions, with 67% of respondents saying they would consider moving if there were more suitable smaller homes in their area.
More than a third, 36%, would downsize if more bungalows were built in their area.
Among the Baby Boomers who had downsized, the most common reason was to move into a property suitable for getting older, stated by 43%.
This was followed by 39% who said their homes were too large and 27% who wanted to reduce bills and household costs. A further 15% wanted to be closer to family or friends.
Barclays’ previous report, Rightsizing Revolution, suggested that 11% of households would downsize if there was accessible, specialised, age-threshold housing available.
Barclays said the government should consider grants or vouchers for downsizers, or the ability to offset moving costs against stamp duty.
It also proposed strategic planning to develop homes suitable for retirement as part of its overall 1.5 million homes target.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said downsizing allowed homeowners to find a home that better suited their needs and reduce household costs.
However, he said: “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.”
Patel added: “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.”
