Downsizing to a bungalow or semi-detached property from a detached home could raise significant amounts of cash, Lloyds Bank has revealed.
The Downsizers report suggests moving into a bungalow could free up an average of nearly £104,000 while opting for a semi-detached property could save nearly £122,000.
Moving into a smaller property was found to be a key driver in deciding to move home with more than half (52%) of homeowners who plan to move doing so for this reason.
More profitable than a decade ago
The figures released in the report relate to property moves in 2014. Downsizing last year was found to be 10% more profitable than a decade previously with the those moving from a detached property to a bungalow getting an extra 8% profit (equivalent to £8,081) in that time.
This means that a downsizer today would gain £103,715 on average for this type of move, compared to just £95,634 in 2004.
Opting to move from a detached home to a semi-detached property could also provide strong returns worth £121,686 in 2014; up 6% – or £6,943 – since 2004.
A money making opportunity
Three in four people who decide to downsize expect to make money when they do so with two in five people choosing to invest their profits into property.
Meanwhile, a quarter will invest any extra cash into other financial products with the hope of boosting their returns – one in ten invest in their pension while a similar number use the funds to support family members in need.
A quarter of people also said they were moving home in order to target a more affordable area – 5% less than those who said the same in 2013 – while nearly two-thirds of people said one of the main reasons for downsizing was to find a home that better suited their circumstances.
Beyond that, the major drivers for moving home were financial with 40% suggesting it would reduce bills while 28% wanted to release equity from their home and 25% wanted to aid their retirement plans.
People are also choosing to downsize at an earlier point in their life as health concerns, changes in relationship status and proximity to key amenities affect their lifestyle.
Those looking to downsize in London stand to make the most in monetary terms, saving an average of nearly £290,000 by downsizing from a detached home to a bungalow, but this is considerably less than they could have made if relocating a decade ago.
East Anglia noted the largest increases in the last ten years as downsizing now provides 38% more than a similar move would have done in 2004.
A significant increase in returns was also experienced by those downsizing in the South West and Northern Ireland – up 32% and 29% respectively.