Older homeowners look to downsize
One in four over 55s plan to downsize within the next 12 months
The coronavirus pandemic has prompted millions of older homeowners to consider downsizing, according to new research.
One in four over 55s plan to downsize within the next 12 months, research by Audley Villages found, with more than half (53%) wanting to move to a home that requires less maintenance than their current property.
Downsizing can not only reduce maintenance costs but can also free up property wealth, which can be used to boost retirement income. Insurer SunLife claims that over-50s have lived in their current home for 20 years on average and seen them rise in value by £127,316 over this period, a sum which could prove invaluable for those who’ve had to stop work sooner than they’d planned to, perhaps because they’ve been made redundant, as a result of the pandemic.
According to the latest Wealth and Wellbeing Monitor from friendly society LV=, which is a quarterly survey 4,000 UK consumers, more than 154,000 people aged 55-64 have opted for early retirement because of redundancy and reduced income, a desire to reduce their risk of exposure to covid, or because the pandemic has made them reassess their priorities in life.
Things to consider if you’re planning to downsize
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If you’re thinking about downsizing, either because you need to free up some of your property wealth, or because you are looking for a property that’s easier to manage as you get older, there are plenty of things to think about first.
For example, it’s important to work out the costs involved in moving to a new property, as these could take a big chunk out of any savings you make from downsizing. Costs include, solicitor’s fees , a survey for your next home, as well as removal costs.
Although there’s currently no Stamp Duty to pay on properties costing up to £500,000, this is only a temporary measure, so it will be payable again from 1 April this year. Anyone starting the downsizing process now is unlikely to benefit from the Stamp Duty holiday as the pandemic means that conveyancing, surveys and valuations are all taking longer than usual. According to property website Zoopla, the average time for an agreed sale to complete has increased from 90 days to 110-115 days in recent months.
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However, the biggest barrier for those looking to downsize is often a lack of suitable properties to move to. Often downsizers are keen to stay within in or near to their current location, which is likely to narrow down their options.
Some homeowners who are struggling to find a property to move to may decide to consider using equity release as a way to unlock some of their property wealth. However, it’s essential to seek advice if you’re thinking about doing this, as it definitely won’t be the right option for everyone. Equity release products have become more flexible in recent years, and according to the Equity Release Council, which is the trade body for the equity release sector, 55% of products now come with downsizing repayment options. This means that the loan can be repaid with no early repayment charge if the customer finds the right property to downsize to in future.
- Download a factsheet Property vs Pension by clicking here