If all your birds have flown the nest and you’re thinking of moving to a smaller property, you may be able to free up a substantial sum by downsizing.

According to the latest Downsizers report from Lloyds Bank, trading down from a detached home to a semi-detached property could see people raise an average of £121,686, while moving into a bungalow could free up as much as £103,715.

The potential windfalls from downsizing have increased significantly in the past decade, with the potential gains from moving to a bungalow rising 8% from £95,634 in 200. Meanwhile, the average gains from moving to a detached house to a semi increased by 6% from £114,744.

London leading the way

Those living in the capital stand to gain the most from downsizing, with London residents making an average of almost £289,927 from trading down from a detached home to a bungalow, while those looking to move from a detached property to a semi-detached house could net an average of £237,614.

In comparison, people living in the north stand to make £101,805 when downsizing to a semi and £70,044 by moving to a bungalow from a detached home.

Downsizing driven by financial motives

And it seems many people are keen to free up some cash by moving to a smaller property, with over half (52%) of homeowners planning to sell their property in the next three years saying they would ideally move to a smaller house.

Most people’s motives for downsizing are financial, with 40% hoping to reduce bills and outgoings and 28% hoping to release equity. Three in four people expect to make money when they downsize.

Andy Hulme, mortgages director at Lloyds Bank, said: “Downsizing is clearly still a major part of the housing market with over half of potential homemovers considering a smaller property. The volume of downsizers is therefore helping to keep the market moving, freeing up larger properties for those making their way up the ladder.”

He added that as well as generating a significant lump sum of cash, downsizing can help reduce household bills, freeing up further funds which people can invest or use to enjoy their retirement.

Investing for the future

But what are people planning to do with any cash they make from down-sizing?

According to the Lloyds report, 43% plan to reinvest the money in their next property, while a quarter will invest in other financial products. One in ten people will use the cash to boost their pension fund, while 13% will use the money to help out family members.

Stephanie McMahon, Head of Research at Strutt & Parker, said: “Our own analysis following our Housing Futures survey shows that 21% of people who move are doing so to downsize to a smaller home and with on average 47% of privately held homes across UK local authorities under-occupied this comes as no great surprise.

"People’s homes are usually their most valuable asset and the financial benefit of downsizing can be very appealing. By selling a larger property and moving to somewhere smaller and more manageable, you can cost save on home maintenance and release equity at the same time. Both represent good ways to help boost your retirement fund for later life.”