Financial freedom check: should I move house?

If housing prices are leaving you feeling stretched, a move could be on the cards. We weigh things up.

Interest rates in 2023 have been at their highest in 15 years. That could spell trouble for homeowners, especially those up for renewal on a fixed-rate mortgage deal.

Renters are worried, too. Annual private rental prices went up by 4.9% in England, 5% in Wales, and 5.4% in Scotland from May 2022 to May 2023.

All these higher costs have got people thinking: would I be better off moving?

Estate agents Hamptons says “stretched affordability” is pushing first-time buyers and early downsizers to look for smaller, less expensive properties.

Aneisha Beveridge, Head of Research at Hamptons, says: “Energy prices have acted as a catalyst for downsizers. I also think that higher interest rates are encouraging some households to move a little sooner.”

Here, we set out some considerations before making any big moves.

1. Cut space, cut housing costs

Sometimes the most obvious solution is the one you’re most resistant to. For example, moving to a smaller place might mean sacrificing a guest room, home office, gym or playroom – so start by considering how often you truly use them.

If you're likely to have people to stay from time to time, think about a simple sofa bed or inflatable mattress rather than a dedicated spare bedroom.

With some clever redesigning, your dining room or kitchen table could double as a home office – or a local co-working space could be a cost-effective alternative to a dedicated study. Kids might be persuaded to swap their playroom for a repurposed garden shed or summerhouse.

2. Consider a change in postcode to get more for your money

In the second quarter of 2023, 26% of buyers moved to a cheaper area, up from 19% the year before, according to Hamptons.

It costs £724 for the average square foot of property in inner London, compared to £331 in the rest of the UK. So you could move out of London and live for less once you've factored in the other costs outlined below.

Outside the capital, one square foot in the Southeast costs on average £435, in Wales it’s £226, and in Scotland £200.

Between April 2019 and April 2023, the largest increases have been in the Southwest (29.9%) where one square foot costs £371, followed by East Midlands (29.6%) at £270, according to TwentyEA.

Katy Billany at TwentyEA, says: “As pressure mounts on those coming out of low-rate fixed mortgage deals, we may see more homeowners looking to downsize or move to a different area, where property prices are lower.”

3. Crunch the numbers to see how much it really costs to move

If you're a homeowner and looking to sell and downsize or move to a cheaper area, ask your mortgage broker to estimate what your new monthly repayments could be on your new property. For renters, it’s a straight comparison.

Before you move, take into account any prospective change in bills, for example if you're moving from a new build to a Victorian terrace your bills could be more. Your new council tax rates, parking and commuting expenses should be considered so they don’t cancel out any potential savings.

If, after any early mortgage repayment charges – which may reduce in percentage over time based on your mortgage balance – you feel moving is still cost effective, then it’s time to factor in moving costs: estate agent fees, solicitor costs, Capital Gains Tax (Opens in new window) and Stamp Duty (Opens in new window)

Overall, the cost of selling a house in 2023 was £6,224 for a £277,000 home, the UK's average, according to Compare My Move.

4. How to spend your new-found buffer

Financial experts would advocate paying off debts, or saving and investing any extra money for a rainy day or the future.

But with the money you free up, you might be able to do more than just save. It could also mean fewer sleepless nights over bills and more cash to do the things that bring you joy.

Recommended reading

• What could you do with an extra £500 each month?
• How to save money on groceries
• How far does a £100k income get you?

Looking for an account to keep your savings? Bank with Chase and you can open a saver account. Start saving with as little as you like, and we’ll calculate your interest daily and pay it monthly.

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Disclaimer: This article is for information only and does not constitute financial advice. As with all investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest.