"Downsizing should be seen as having value in its own right, not solely existing as a necessary instrument for keeping the gears of the property market moving freely."
It’s a given that the media is obsessed with the property market, but it’s fair to say that they don’t always provide a fully balanced view. For example, first-time buyers receive an awful lot of press and with good reason - without them the market won’t keep moving – and their plight is a constant in the newspapers. I read recently that First Direct has found that the average prospective buyer now predicts they will be 37 years old by the time they get their first home; that’s not a healthy state of affairs.
But equally important, despite garnering fewer headlines, are those who want to downsize.
Perhaps this is understandable; the view in the press is that people want to read aspirational stories – the dream of the new home, the bigger garden, the move to the country; but without downsizers, those looking to move up the property ladder will face frustrating supply issues.
Downsizing should be seen as having value in its own right, not solely existing as a necessary instrument for keeping the gears of the property market moving freely. It also shouldn’t just be thought of as the preserve of those facing retirement or ‘empty nest’ syndrome.
Talking to mortgage brokers, who provide invaluable intelligence straight from the coal face, and we get a more accurate picture of the downsizing market. With 2022 being dominated by sharply rising energy costs and the cost-of-living crisis, brokers report more clients looking to downsize in order to reduce their gas and electricity bills. Other reasons include people wanting to move more into the centre of cities, (where property prices are more expensive, but come with more amenities, attractions and often but not always better public transport) and moving closer to family.
Complicating factors
One could be forgiven for assuming that downsizing should be relatively simple, generally because the new purchase can be funded by the sale of the previous property, without the need for additional borrowing. That said, issues can make the situation more complicated – any time there is a chain involved, things can go awry.
While house prices appear to have plateaued for the time being, and Nationwide reporting falls in house prices in November, first-time buyers are still facing considerable affordability issues. Interest rates on residential mortgages are on average at least two percentage points higher than they were 12 months ago, and demand for larger, more expensive housing is tailing off; it’s clear some parts of the market are stalling.
This means that those looking to downsize may well discover that buyers for their existing property are harder to come by. If they want to get things moving, they may need to compromise: accept a lower offer for their property or miss out on the smaller property they were hoping to purchase. Neither are particularly attractive options.
The third way
There is an alternative, however, and one which we find serves clients well. A regulated bridging can be employed to help the downsizers sidestep the chain and purchase their ideal property. It uses their existing property as an asset to be used as security to effectively turn them into a cash buyer, without having to sell the property at an unacceptably discounted price. All this can be achieved quickly and with a relatively simple application process.
The key to successfully negotiating today’s tricky property market is to partner with lenders who have a strong funding line and track record of delivering. At Alternative Bridging Corporation, due to our 30+ years in the business, we can provide a flexible and tailored approach to each case.
We look at each application individually, listen to you and your client and our decisions are made by people, not by algorithms. When we say yes, we deliver.
Our regulated bridging loans are available from three to 12 months, providing ample time for the downsizing client to sell their existing property at a more desirable price and to keep the property market moving.
