We were interested to read a report by Lloyds Bank* this week which suggested that nearly half (46%) of home movers in the UK plan to downsize in the next three years and could realise up to £200,000 as a result.
Downsizing was cited as the single most popular reason for moving and the average age for a downsizer is 53 years old.
The reasons for wanting to downsize varied, with 53% saying they wanted to move somewhere that better suited their circumstances, 39% saying they wanted to reduce bills or free equity and 31% wanted extra cash for retirement.
Mike Songer, mortgage director with Lloyds Bank suggested that whilst financial reasons are not always the main driver for downsizing, three quarters of people expect to profit from such a move.
He said: ‘There are definitely financial benefits to be gained from trading down, with an average potential windfall of £117,230 when moving from a detached home to a semi-detached house. Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties which could be perfect for young families about to take their next step up the property ladder,’ he added.
Unsurprisingly it was downsizers in the London area that make the most from downsizing with home owners making £201,052 on average from the sale of their home. Downsizing to rent a specialist retirement property is a good financial solution for many older people as it frees up all their capital.
This is borne out by research we undertook earlier this year which found that 35% of people over 50 wish to downsize from a larger family home to a retirement property more suitable for their needs. We receive many enquiries from older people who are choosing to take this option when they retire, attracted by the security of tenure that the assured tenancy offers, plus the ability to budget effectively as the monthly rent includes the services of the development and property maintenance costs giving them the financial freedom to really enjoy their retirement years.
Our research also highlighted that the majority of older people don’t want to put their feet up in retirement but are instead looking for adventure. 70% of over 50s said they wish to travel more, with more than a third (37%) wishing to travel several times a year. Having additional resources, for instance from the sale of a house, can help fund such plans plus the ability to ‘lock up leave’ when renting a purpose-built retirement property in a secure development brings added peace of mind to the traveller.