A recent study conducted by retirement specialist Key Retirement Solutions, has revealed 20% of over 55’s want to downsize their property to save money in retirement.
Financial experts point out there are many reasons why people over the age of 55 might want to downsize. The survey found 19% of respondents couldn’t afford to run their home, whilst 4% have admitted they must downsize because they can’t afford their monthly mortgage payments.
The survey also found that when downsizing, the average homeowner aims to raise around £78,000, with 25% of respondents admitting they would be using the money to help their children get onto the property ladder.
Dean Mirfin, Group Director at Key Retirement Solutions, said: “There is huge demand for downsizing with nearly one in five or around a million people planning to do so in the next five years.”
The retirement specialist is planning to launch a new service to help over 55’s, who want to downsize, sell their existing home and buy a new property. However, such service doesn’t come for free; Keymove Property Services will charge 2.5% of the house value for this service, which is more than a typical estate agent will charge to sell a home, but does include all legal, valuation and estate agency fees.
Speaking about the new service, Vic Pegna, said: “We feel that a number of our customers would like to move but are daunted by it; most of our customers have been in their house for 20 years or more. If the house is costing too much to run, for example, then it will still be too expensive with equity release so the best option would be to downsize.”
The survey from Key Retirement Solutions comes in the same week that two think tanks have published their thoughts on the housing market.
The Policy Exchange, a right of centre think tank, said property developers should look to build more bungalows for the elderly, this would allow older generations to vacate larger properties, which often have spare bedrooms and are more suitable for families.
The report from the Policy Exchange said: “There are huge numbers of spare rooms in homes older people are currently living in. What are needed are the homes that older people like and so would like to move into. But planning policy prevents these homes from being built.”
At the other end of the political spectrum, the Fabian Society, a left leaning think tank, has called for a property tax to reduce house prices and promote a fairer housing market.
The think tank believes the property market is unfairly skewed against younger people, many of whom are struggling to get onto the housing ladder. The society found that home ownership amongst pensioners had increased significantly, with over 75% owning their home, compared to around 50% just 20 years ago. At the same time, younger people under the age of 45 have seen a “dramatic fall” in levels of home ownership.
The Fabian Society said in their report: “For all this pain for younger households, high house prices are bringing little benefit to older people since so few are unlocking their housing wealth during their own lifetimes.”
It is clear that the issues facing the housing market are will not be solved easily. Many experts believe that whilst first time buyers, who are often seen as the ignition to the housing market, find it hard to get a mortgage no significant improvement will be seen. As rents continue to rise, making it harder for first time buyers to save the deposit needed, experts hope the Funding for Lending Scheme starts to help first time buyers more effectively than it has so far and the various other government initiatives, such as NewBuy and Help to Buy, provide the much needed additional help.