Time to make a savvy move
DOWNSIZERS CAN CASH IN ON UPSURGE IN HOMES HUNT, SAYS
AS house prices continue to rise, experts say we are now in a “seller’s market” and this offers an opportunity for older people looking to generate extra cash in retirement by downsizing.
Empty-nesters who move into smaller and easier to manage homes could generate hundreds of thousands of pounds for their retirement. It could be an opportunity to pay off debts and reduce overheads such as energy bills, insurance and council tax.
Downsizing can also free up properties for young families keen to move up the property ladder.
While millions dream of downsizing in retirement, far fewer get round to it in practice. So do the upsides outweigh the downsides?
SELLING UP
Whether downsizing works for you partly depends on the size of your house and where you live. Owners of family homes in pricier parts of the country could generate huge sums by trading down, but elsewhere it may not be as lucrative.
Unsurprisingly, if you own a property in London, you are in a strong position, with the average owner able to pocket £417,881 by downsizing.
Homeowners in Brighton can earn a windfall of £156,636, closely followed by Bristol at £148,609.
At the other end of the scale, downsizers in Wolverhampton would generate just £59,890 on average, falling to £54,133 in Bradford and £35,775 in Hull.
Downsizing may be less lucrative in Wales, Scotland and Northern Ireland, where house prices are typically lower, according to the research from PensionBee.
Chief executive Romi Savova said the extended stamp duty holiday makes now a tempting time to downsize: “It could release a significant sum, right across the UK, to boost your retirement fund.”
Buyers are hungry for properties, with mortgage approvals in February 87,000 higher than last year, according to latest Bank of England figures.
Richard Pike, sales and marketing director at property specialists Phoebus Software, said government incentives are underpinning demand and prices: “Competition from buyers makes this a seller’s market, which is pushing up prices in most areas.”
BIG DECISION
Downsizing is a complex decision that depends on personal factors, said Andrew Morris, senior equity release adviser at Age Partnership.
As well as moving to a smaller, cheaper home, you could also find somewhere more suitable for later life. “If your garden is too big to manage, the stairs are too steep, or maintenance costs too high, downsizing makes sense,” said Andrew.
“Some may want a fresh start after a loved one has passed away, or favour a retirement community with warden assistance.”
Where your family is based is also a factor, as some move to get help with tasks and chores, while others will be reluctant to move away if their family is already nearby.