Almost half (44%) of estate agents report seeing a rise in enquiries from older homeowners looking to downsize over the past year, according to a report from equity release provider Key Partnerships.
The dilemma, however, is a shortage of suitable homes to meet demand; added to which too many those looking to move are over optimistic about just how much they can realise by a move to lower priced accommodation: 62% of estate agents say that would-be downsizers have unrealistic expectations.
Over half of the agents that responded (56%) report a shortage of homes on the market suitable for downsizers – especially those who are less mobile. Smaller properties suitable for older people also often attract a premium because of the demand for this type of property.
“When downsizing works it can be an ideal solution for older homeowners but sellers need to be realistic about how much they are going to make and it appears many are struggling to find suitable homes,” said Will Hale, director at Key Partnerships.
“The shortage of homes for sale is pushing up prices for downsizers who may struggle to raise the sort of money they are expecting to help with retirement planning while also having to go through the upheaval of moving home,” he added.
In a survey carried out in 2017, 30% of RetireEasy LifePlan users included downsizing as a possible future way to raise capital, highlighting the need for anyone contemplating this route to know precisely how much they can net after a move after costs are taken away.
You can include a downsize in your Classic or Premium LifePlan calculations by going to ‘Future downsizes’, clicking ‘Yes’ and choosing the percentage of the value of your home you plan to release. The surplus funds will then be included in a notional investment account from that date, increasing in line with the yield and growth assumptions you previously selected. If you are a Basic user, then please upgrade to either Classic (just £2.99 per month) or Premium (£3.99 per month). In Premium you can also opt to plan a Lifetime Mortgage either instead of a downsize, or in addition to one…
