Blog
Looking to downsize?
Tuesday, March 28, 2017
Property is a fundamental part of retirement planning for many people. Once grown up children have left home, downsizing can release cash for income, paying off debts or as a nest egg, and can also reduce overheads and maintenance costs. But new reports suggest that a lack of suitable properties means that many are unable to downsize and remain “stuck” in their own home.
Downsizing as a concept has received increasing media attention as a partial solution to the lack of housing stock in the UK. With 50% of under-occupancy found in the homes of those over 55 in the UK, measures to encourage downsizing could undoubtedly boost housing opportunities across society. However, the idea of downsizing in later life should be about the choice of the individual rather than an obligation to younger generations.
2016 figures show that 32% of homeowners aged 55+ are considering downsizing with lower maintenance costs being the most important reason behind the decision. Almost 30% of those downsizing expected to release over £100,000 in equity with most putting it into a savings account (35%) or, for those aged 55-59, into a pension (34%). Specialist retirement housing is a popular option with nearly 3.5 million older people interested in downsizing and buying a retirement property.
Downsizing is not for everyone, but there are significant benefits: • Downsizing can free up wealth held in properties and provide financial benefits for better quality of life in retirement. • Lower Maintenance: Reduced space to heat and clean can make life both easier and cheaper in retirement freeing up time and money for leisure pursuits. • Downsizing to a property better suited to physical needs can benefit both health and wellbeing. It can reduce the number and duration of hospital visits with fewer falls or accidents. • Retirement properties encourage greater social contact and interaction, reducing loneliness and its associated negative impact on wellbeing. So what discourages people from downsizing? • Strong emotional attachment to the family home. • Inertia and avoidance of stress, disruption and hard work associated with a move • Pride - some see downsizing as downgrading and worry how it may be seen by others. • Hospitality – the need for somewhere to host guests and family. • Cost - whilst freeing up equity is a benefit, moving costs, such as stamp duty, may encourage them to stay put in order to guarantee an inheritance to their children. • A lack of suitable smaller properties.
The key to downsizing in later life is to offer better opportunities for older people to make positive choices to enhance their lives and wellbeing. For suitable properties in your area, contact your local Frost office
