Long-term homeowners - at the top of the property ladder and often mortgage-free - have been the biggest winners of the property boom years. Downsizing - when children have flown the nest, to fund a summer home or support children onto the propery ladder - is usually the next step and is still an attractive option, even in a house price slump.
Making a profit from property
Increases in property prices over the last ten years, coupled with home improvements you may have made along the way, should mean you'll fetch a higher price than you paid for your property - that's regardless of the constraints of the current property market. This means you should be comfortably positioned to find a smaller property and have money left over.
New horizons
Many downsizers are using this extra money to fund a new lifestyle - a dream rural location or a second home abroad.
Enticed by cheaper property and warmer climes, almost a million Britons already draw their state pensions abroad, and this is set to rise to one in eight of over-55s by 2010, according to Saga. A further third of us prefer the peace and quiet of rural settings to towns or cities - and that's where many other downsizers are relocating to. Our guide to the best value countryside locations will help your funds go further.
The Bank of Mum and Dad
The boom that helped homeowners make money on property has created a tougher market for first-time buyers to survive in - meaning an increased reliance on the 'Bank of Mum and Dad' to help them get on the property ladder.
This is one of the main factors driving homeowners to downsize. One in five parents have financially assisted their children to buy their first property, and another 22% are planning to do so, according to Alliance and Leicester.
Director of Residential Property at Savills, Lucian Cook, says: "There are two main financial drivers to downsizing – one of them is avoiding or minimising your inheritance tax, and the second one is facilitating your kids getting onto the housing ladder."
How you could be affected:
There are two main financial drivers - one of them is avoiding or minimising your inheritance tax, and the second one is facilitating your kids getting onto the housing ladder.
Lucian Cook, director of Savills
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jb (Halton), on 07/03/2008 at 21:54
I look at downsizing to help your kids onto the property ladder as a way of helping your kids out when they need it most when they have the least. Hopefuly, as they make their way through life they will be able to stand on their own two feet as a way of natural progression. Moreover, I think that it's nice for parents to see their kids enjoy 'their inheritance' whilst parents are still about to see it. Although I do think there is a balance to be had as I for one will help mine onto the ladder but will also enjoy spending the rest whilst I still have enough brain cells and energy to enjoy and rememeber the experiences I hope to have...good philosophy I beleive and best of both worlds I say in a climate that I believe is driven by materialism that we as parents / adults / society etc etc have created as a legacy and way of life for our kids in any event !!!
keith (Bedford), on 14/02/2008 at 08:11
Its a shame that most Kids wont stand on there own two feet no matter what you give them.The idea of saving or pensions of any kind is a big no no.They think Mum and Dad will always be there.What ever they earn they spend on there selfs.There attitude is always sombody else will help them ,benifits and handouts are there first thoughts.Im sorry to sound like a bitter old man and father,but I do live in the real world.
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