Downsizing is often seen as a move to having a simpler life, but it comes with its own sets of challenges.
Recent analysis by Savills found there were 131,200 downsizers in 2025-26 with £462,500 being the average price of the homes they sold and £304,150 being the average purchase price of their new home.
Some people downsize into retirement homes, others are empty nesters, and other factors – such as divorce – can play a part too.
There are other factors too. Phil Spencer, property expert and founder of property tips website Move iQ, said he was seeing a steady flow of “urban returners”.
These are people who swapped living in the city for a larger house in the country during the post-Covid boom – often known as the race for space – but now feel the long and expensive commute to the office isn’t worth it.
“Urban returners tend to be downsizing in space rather than cost terms,” he said.
Whatever the reason you have, there are many things that need to be considered before making the move – especially from a financial perspective.
The i Paper spoke to experts to get their tips on the best way to downsize, what to avoid and things you need to consider before making the move.
What to do before downsizing
Phil Spencer encouraged people to start thinking early about what you will do with the items you can’t take with you.
He said: “Do you put them into storage, gift them to family or friends, or sell them?
“While the prospect of leaving a home full of memories, or reducing your number of possessions, can feel a wrench – never lose sight of the bigger picture. Remember why you’re downsizing and look at it as a chance to reset and start a new chapter in your life.”
Karishma Darji, property and storage expert at Ready Steady Store, also suggested measuring your furniture and planning for what doesn’t fit.
She said: “Once you’ve decided what furniture to take with you, it’s time to get rid of the rest,” Darji said.
Some charities offer furniture pickup free of charge or you could consider selling it if valuable.
It is also important to prepare your home for selling, Darji suggested surveying your home for damages and make any repairs prior to the sale.
Remember that in the current market, experts are repeatedly stressing the idea of pricing sensibly to sellers.
Richard Donnell, executive director at Zoopla has said: “Correctly priced homes are selling, while overpriced homes are sitting.”
Beware of the costs
Though the urban returners mentioned by Spencer are trying to downsize to move to the city, rather than to explicitly save costs, many downsizers do so in order to cut their costs.
Edward Heaton, from buying agent Heaton & Partners, said many were “seeking a more manageable lifestyle” or trying to free up equity to help their adult children.
With this in mind, downsizers need to go into a move wary of the costs involved.
One of these costs is stamp duty – a tax charged whenever you buy a home. This is charged at the rates below, or with an extra 5 per cent surcharge if you’re buying a second property.
This isn’t the only consideration.
You’ll pay fees to the estate agent. On average in 2025, sellers paid around 1.3 per cent including VAT, according to Rightmove. For a home worth £275,000, that works out at about £3,600.
Property experts have also warned that you should look at any extra fees involved with your new property.
Tamsin Powell, consumer finance Expert at Creditspring explained: “A smaller property may mean lower mortgage payments or utility bills, but other expenses like insurance, council tax, travel or even food could increase. Make sure you look at the whole picture to better understand what your overall finances will look like after the move.”
Property expert Jonathan Rolande warned specifically that people moving to retirement flats should check all the costs.
“Maintenance for flats, especially retirement properties can be eye watering. A two-bed purpose built property might average £2,000 – if it is warden assisted it might be £4,000 a year,” he said.
You do not normally pay Capital Gains Tax (CGT) when downsizing if the home you are selling has been your only or main home the entire time you owned it, but you can do if it’s a second residence.
What to do with the cash you’ve gained from downsizing
Many downsizers will free up equity once they downsize, and could have money to spend or save once you do.
“Whether it’s boosting retirement income, creating an emergency fund or paying off debt, treating that money as part of your long-term financial security can make a real difference,” Powell explained.
Nimesh Shah, CEO at accountancy and tax firm Blick Rothenberg, said considering gifting could be a good idea.
Some older downsizers may be concerned about inheritance tax, charged at a rate of 40 per cent on estates over £325,000, or £500,000 if a primary residence is included.
A person can gift money and it can be exempt from IHT, providing they live for seven years after making the gift.
“Could this be a good time to make some gifts for inheritance tax planning and start the ‘seven-year clock?'” he suggested.
If you are planning on investing your cash, he said to make sure you did so with advice and having used tax wrappers like ISAs – which allow you to put £20,000 in investments or savings, and take all growth or interest tax-free.
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