There are multiple advantages to downsizing, from the financial to the eco-conscious and it’s not just for emptynesters. Hamptons’ experts highlight the attractions of a smaller, newly built home
May 24, 2023 13:51
Downsizing (or “right-sizing” as it is also known), in various forms, is a big trend in the housing market at the moment, driven by the rising cost of living and higher interest rates.
Hamptons’ research has identified an increase in older homeowners selling their properties this year after owning them for at least two decades.
These vendors, many of whom have benefited from strong capital growth, are likely to be selling up to move to a smaller, cheaper home in a bid to reduce their outgoings, amid increased energy and living costs.
But it’s not all about empty-nesters. Higher interest rates mean first-time buyers are downsizing too, notes Hamptons. Contrary to expectations, these buyers are still very active in the market but are adapting to the new, higher-cost conditions by purchasing smaller, more affordable properties.
Meanwhile, older landlords are selling up as they approach retirement age, with the over-60s accounting for almost three-quarters of all buy-to-let property sales last year. While age is the main trigger for cashing in, the decision to sell has been compounded by lower returns and the effect of higher interest rates.
Overview of the Royal Connaught Park, Bushey, luxury apartments in a grade II listed building, with leisure facilities, from £610,000. Hamptons is agent.
This year so far, the housing market has been increasingly driven by older homeowners who have lived in typically a larger property for 20-plus years, reports Hamptons head of research, Aneisha Beveridge, analysing the latest data. Last year, the average seller had been in their existing home for 13 and a half years but this year, that figure has risen to 14 and a quarter years. While it doesn’t sound like a monumental shift, these numbers don’t tend to move particularly quickly, says Beveridge.
Overall, 32 per cent of sellers who listed their home for sale so far in 2023 had bought their previous home at least 20 years ago (up from 27 per cent in 2022), while fewer of the sellers coming on to the market this year bought their existing home within the past five years — perhaps because anyone who bought at the height of the pandemic is potentially looking at selling for less than they paid.
While the average seller in 2023 listed their home for £190,000 or 157 per cent more than they bought it for, those who purchased more than 20 years ago stand to make gains of £292,000, or 355 per cent, says Hamptons.
These sellers have reaped the benefits of strong capital growth and are likely either to have paid off their mortgage or be close to doing so. Those downsizing will be able to extract some of the proceeds of these gains.
Detached homes don’t come on to the market that often. However, one in five sellers listing their home this year is trading a detached house, up from 17 per cent in 2022. Of those owners who initially bought more than 20 years ago, 22 per cent are selling a home with four-plus bedrooms in 2023, compared to 20 per cent in 2022.
The North West and North East are the regions with the biggest increase in the share of households selling after more than 20 years. These are markets where, until the past few years, there has been less movement, given house price growth has lagged behind the South.
The North East, in particular, saw average house prices return to their pre-2008 peak only in 2021, which will have limited some homeowners’ ability to pay off their mortgage when moving.
London, where sellers have typically seen the strongest house price gains, is also high on the list. “I suspect it’s here that sellers are making post-Covid moves, with the wealthiest perhaps selling long-term second homes to reduce their outgoings,” says Beveridge. “Overall though, the shift towards older homeowners selling up supports the theory that downsizers, who have typically been quiet in recent years, are now making their post-Covid moves, spurred on by rising energy and living costs. “Furthermore, quieter markets tend to benefit older homeowners who often aim to line up their onward purchase before selling their own cherished family home.”
Last December, Hamptons’ blog commented that, “with a cost of living crisis weighing on the pockets of all, many have turned to downsizing as a way of reducing monthly bills and expenses, as well as freeing up cash. This has been amplified by rising interest rates on equity release, which had become a popular option for older generations to free up cash without selling their home. But it turns out that the 2022 housing market has been prime for those looking to cash in and move to smaller homes.”
Teddington Riverside, apartments from £610,000; Hamptons is the agent.
Over the past five years, the value of larger family homes has risen much faster than flats, reports Hamptons. The Covid-induced race for space put a premium on larger homes with the extra room for an office or a growing family. Consequently, downsizers looking to move against the flow, now free more money than previously.
The gap between the price of a large family home (a five-bedroom semi or a detached home) and a downsizer option (a bungalow, over-55s home, or a ground floor flat) has widened to the largest on record.
In 2017 the average downsizer home cost 57.9 per cent less than a large family home. Since then, the gap has grown to 63.5 per cent. This has allowed downsizers to free more cash than ever before, with the gap equating to a £554,910 average saving in 2022.
Backed by the strong price growth of larger homes, those looking to sell and move to a smaller dwelling have found themselves in a strong position.
However, this gap may have widened as far as it ever will. A higher interest rate environment is likely to mean that fewer first- and second-time buyer budgets will stretch as far as a house, pushing up demand for smaller homes. These groups typically have the least equity and as a result are most exposed to rate rises, making trading up to a house more difficult than it used to be.
That being said, downsizers are likely to be increasingly important players in the market over the next couple of years, says Hamptons.
Delayed demand from Covid, higher energy costs and punishingly expensive equity release rates mean the appetite from older Baby Boomers to move to smaller homes is high.
While paying a mortgage is a distant memory for virtually every downsizer, upsizing would-be buyers of their home will still be hit by rising rates, meaning that unfortunately, no-one is immune from today’s economic realities.
Hamptons’ April buy-to-let report states that while new-build homes command a premium over older rental stock, 96 per cent of new-builds fall into EPC (energy performance certificate) bands A-C, meaning investors would not have to pay for improvement costs.
Maintenance and running costs are likely to be lower too. The Home Builders Federation estimates it would cost more than £70,000 to upgrade an older three-bedroom semi-detached home with all the features of a new-build.
New-builds also achieve higher rents, notes Hamptons. In 2022, the average new-build one-bedroom flat achieved 13 per cent more in rent than an equivalent older home in the same postcode. For two-bedroom flats, this figure was 15 per cent.
In February this year, Hamptons noted in a blog that new-build homes were increasingly popular. This is largely because they cost less to repair, are more sustainable and energy-efficient, and have layouts built for modern living.
And with energy prices expected to rise by another 20 per cent from April as Government support for households scales back, the appeal of energy-efficient new-build homes has never been greater.
Rest Less, which describes itself as “a digital community for the over 50s”, and Hamptons have explored some of the main benefits of moving into a new-build property.
Due to modern building techniques and materials, and the appliances installed, new-build properties tend to be more energy-efficient than older homes. And research has revealed that energy efficiency — whether for environmental or financial reasons — is a key consideration for one in every four people purchasing a home.
Government data has revealed that new-build properties use an average of 100kWh per sq m (electricity consumption per sq m) each year, while older properties require an average of 259kWh per sq m.
This is partly why, in 2022, 84 per cent of new-build homes were rated with an EPC of B or above, while less than four per cent of existing properties were awarded the same standard. As a result, it’s estimated that moving into a new-build property saves people an average of £2,600 a year on energy bills.
Many new-build properties are built to a ‘Passivhaus’ standard, which means they use energy more sustainably.
For example, each new-build three-bedroom house in The Maples development in Edgware features six solar panels and an air source heat pump system, meaning these homes have a band A environmental impact rating. Off-street parking with electric car charging points is available too.
The specification includes a ventilated heating system, instant hot water taps, hot water supply via rooftop solar panels, and green roofs to attract local bees, butterflies, and beetles.
Some of these features, such as rooftop solar panels, aren’t always as straightforward to add to older properties due to the nature of their rooflines.
New-builds generally cost less when it comes to repairs because it’s unlikely the property will need much work done in at least the first few years. This is particularly true if it’s been built to the latest specifications, which most new-builds are.
Even where repair work is needed, most new-build homes come with by a warranty such as the National House Building Council (NHBC) which typically covers a ten-year period.
The warranty provides protection against things going wrong with your new home, for example, structural damage or defects. In practice, this would cover issues with building work, such as faulty pipes that cause the heating system not to work properly.
In many cases, there’s another warranty that covers any white goods that come with the property, usually for a minimum period of two years. Not all new-build warranties are guaranteed to cover everything that goes wrong with your property, so always read the small print.
To get an idea of the type of appliances that can be included with new-build properties, Hamptons cites Westvale Park in Surrey. These new-builds include Siemens appliances, built-in wardrobes, and soft-close doors.
It is common for new homes to have open-plan, multi-functional spaces. For example, an open-plan kitchen and living room area that provides plenty of space to cook, eat, relax — and for children or grandchildren to do homework. Many new-builds also have studies, useful for working from home. They might have easy access to the outdoor space through French, bi-fold, or sliding doors; and en-suites, as well as family bathrooms. They’re often built with space for more than one car, too, such as large driveways and additional parking.
For example, West Hampstead Central, which has one- and two-bedroom apartments for sale, offers open-plan living with private balconies, a communal roof garden, 12-hour concierge, on-site gym, and co-working space. However, some new homes — especially apartments — may have smaller rooms and they may not offer much garden space.
On-site amenities can include communal gyms, cinema rooms, restaurants and cafés, and places to work or study. For example, Brighton and Hove’s Sapphire Hove development is just 500m from the beach. Residents can access co-working spaces and enjoy landscaped gardens, underground parking, 24-hour security, and a concierge. There’s also a synagogue, Jewish Montessori nursery, and kosher dining options.
New-build developments like these create the ideal environment for close-knit communities to form, because people can enjoy much of their day-to-day lives close to home, allowing them to get to know their neighbours better. Plus, for those who are downsizing into a new-build property, on-site entertainment and dining can provide more space to host family and friends.
Most new homes come with outdoor lighting, burglar alarms, window locks and British Standard Five lever locks. Some also offer 24-hour security and concierge. Aside from feeling safer, tighter security mean contents insurance premiums will often be reduced.
There’s no onward chain, which typically makes the process a lot quicker and less stressful. It also gives people more opportunity to negotiate moving-in dates, without the pressure of having to tie in with sellers. And, once you’ve put in an offer on a new-build, you don’t have to worry about being gazumped, or a seller pulling out. However, if your new home is still being built, there can sometimes be delays linked to that work, such as the supply of materials or availability of workers.
From extra security to energy efficiency and eco-friendly features, there are a number of benefits of moving into a new-build property — and it’s not difficult to see why they’re becoming a more attractive prospect to home buyers.
Yet, as with any large purchase, it’s also important to be aware of potential drawbacks and to do your research. For example, as with buying a new car, new-builds may see a drop in value once you move in and create an onward chain. For this reason, new-builds can be most beneficial for buyers who plan to live in them long-term. You should also be clear on whether you’re buying a leasehold or freehold property.
If you buy a freehold property, you’ll own the house and the land it stands on for an unlimited period. If you buy a leasehold property, you’ll own the property but not the land it’s built on, and only for a set period. The government currently has plans to scrap most leaseholds in England and Wales.
While there’s lots to consider when buying a new property, having an experienced estate agent on your side can give you an advantage.
The Goldleaf, terrace, apartments in Radlett, from £535,000. Hamptons is the selling agent.
The Goldleaf, Watford Road, Radlett, by Scorpius Property Developments, is selling off-plan. There are 18 apartments, with a choice of one or two bedrooms. Kitchens have bespoke cabinets and recessed handles, 20mm quartz worktops, full splashback, integrated Siemens appliances, Lusso Stone instant hot water tap and waste disposal.
The Goldleaf, en-suite, apartments in Radlett, from £535,000. Hamptons is the selling agent.
Bathrooms and ensuites feature large-format tiles, mosaic feature walls, matt white stone resin basins on black metal stands, wall-mounted brushed brass taps, wall-hung concealed-cistern WCs, fully folding bath screens, feature wall light in vanity areas and a bespoke vanity unit for each bathroom.Bedrooms are fitted with super-soft stain- resistant carpet, bedside switches, TV points, wiring for Sky/Virgin and built-in wardrobes with integrated lighting.
The apartments also have wide plank engineered oak flooring, a gas boiler and wet underfloor heating. Dimmable recessed spotlights are included throughout, along with curtain niches with integrated lights. Also included is a washing machine. Selected apartments have a study and all have outside space. There are electric car charging points, residents’ undercroft car parking and bike storage, and visitor parking available.
The Goldleaf, living room in Radlett, from £535,000. Hamptons is the selling agent.
The Goldleaf is “a short stroll” from Radlett train station. Prices start at £535,000. In Bushey, Royal Connaught Park has strong appeal for downsizers. Formerly The Royal Masonic School for Boys, it is now a private gated development of luxury apartments in the grounds of a Grade II listed building, with access to more than 100 acres of mature parkland.
The original buildings were designed by the Victorian architects Gordon, Lowther & Gunton and the foundation stone was laid by Queen Victoria’s son, the Duke of Connaught.
The apartments, part of the Comer Homes Nova Collection, combine original architectural features with a modern take on luxury living. They have contemporary kitchens with handleless units, porcelain limestone flooring, quartz worksurfaces, stainless steel sink and Miele or equivalent integrated appliances.
Bathrooms have high-spec sanitaryware, porcelain limestone floor tiles, polished porcelain wall tiles with chrome trim, chrome heated electric towel rail, fitted mirror, thermostatic shower with Vado or equivalent shower arm and head, chrome and glass shower door, Vado or equivalent contemporary taps and chrome LED spotlights. Bedrooms have wood-effect flooring and chrome LED spotlights.
Wet underfloor heating is installed in all rooms, with individual thermostats in each room.
Other highlights are walnut-finish veneer doors with satin chrome door handles; low-profile chrome light switches and sockets; double-glazed windows and timber decked balconies with decorative wrought-iron railings (on selected apartments).
Safety and security is enhanced by mains-operated smoke detectors; colour screen video entry (communal entrances). video entry to pedestrian and vehicle gates and 24-hour CCTV. Homes have high-level acoustic insulation; high-efficiency heating and hot water supplied from 30kw system boiler, mechanical ventilation with heat recovery; TV and Sky Plus connection points to main rooms, phone points and broadband connection.
Royal Connaught Park, Bushey, luxury leisure facilities, from £610,000. Hamptons is selling agent
Living room from Royal Connaught Park, Bushey, Hamptons is the selling agent.
Bedroom from Royal Connaught Park, Bushey, Hamptons is the selling agent.
Luxury Kitchen from Royal Connaught Park, Bushey, Hamptons is the selling agent.
Royal Connaught Park has a health and fitness suite, where residents will be able to enjoy the private pool, sauna/steam room and whirlpool bath, gym and tennis courts. A private chauffeured coach takes residents to Bushey station and Watford town centre. Prices start at £610,000.
TwentyThreeWest Houses in West Ealing, from £1,020,000. Hamptons is the selling agent.
Ealing is London’s greenest borough, with 3,300 acres of green space and parks, including Ealing Common and Walpole Park. In West Ealing, TwentyThreeWest is a joint venture partnership between Fabrica and Real, which will see 23 private terraced properties developed along leafy Felix Road.
Designed by award-winning architects Conran and Partners, the three-storey houses are configured to maximise light and space and will have open-plan kitchens with quartz worktops and integrated Siemens appliances, large floor-to-ceiling windows, en-suite bathrooms to the master and second bedrooms, underfloor heating and private landscaped front and rear gardens. Parking permits are available at separate negotiation. Prices start at £1,020,000.
Local amenities include cafés, restaurants, and shops. There is a large Waitrose, as well as a footbridge providing easy access to West Ealing station, 500m away from the scheme. The Elizabeth Line gives good connectivity — a trip to Bond Street will take just 15 minutes and you can reach Heathrow in 15 minutes or Canary Wharf in under 30 minutes.
If you fancy living beside the Thames, there are one-, two- and three-bedroom apartments, as well as four-bedroom townhouses at Teddington Riverside. The apartments would suit downsizers looking for a more manageable property with good transport links into central London and lots of local amenities, such as coffee shops, restaurants, cinemas and, of course, riverside walks. Prices start at £610,000.
Attractions include 24-hour concierge and security (video entry; security gates with access control and CCTV), open-plan living and a balcony, terrace or garden for each home. The apartments have underfloor heating throughout, fitted kitchens with Siemens integrated appliances and oak timber engineered flooring in the hall and living room. Bedrooms have tufted 80 per cent wool carpet and there is white high-quality sanitaryware, chrome taps and fittings in the bathroom.
Teddington Riverside, townhouses from £1,999,995. Hamptons is the agent.
Teddington Riverside stands in communal gardens. The site was originally landscaped between 1811 and 1820. Teddington Village is a five-minute walk away, with a good variety of shopping and dining. Sporting and leisure choices locally include The Lensbury, a world-class private members’ club .
The scheme also includes four-bedroom, three-storey townhouses with bespoke designed kitchens, home-working space and full height windows.
Bishop’s Gardens Two-, three- and four-bedroom homes in Wickham, Hampshire, from £349,950. Hamptons is the selling agent.
In Wickham, Hampshire, Bishop’s Gardens has two-, three- and four-bedroom homes from £349,950 to £645,000 and is a fine example of the benefits of new-build.
The homes are ready to move into and have low-maintenance gardens. The flexible accommodation includes integrated dishwashers and fridge/freezers.
Jon Hatfield from Hamptons New Homes says: ‘’The Bishop’s Gardens development by Bewley is very cleverly designed and located to cater for all the housing needs for people from the local area and further afield. Wickham is a beautiful historic market town and has a thriving community.
“The local housing stock tends to be older, some distance away from the market square, and far less efficient than modern day new-builds. The scheme is a very short walk from the town and all the amenities, which is very unique to the area. Without doubt Bishops Gardens fills a large gap in the local housing market for first-time buyers, upsizers and of course downsizers.
The units sold so far have been a mix of all of these demographics and the site has a real community feel.’’
