Around a fifth (20 per cent) of clients of financial advisers have enquired about downsizing but many are put off by the idea of losing touch with family and friends, new research from Bower Retirement Services shows.
There is growing interest in using property wealth to help fund or boost retirement planning with the average adviser with one in five advisers saying nearly a third of clients are considering downsizing, according to the latest Adviser Tracker Research from Bower.
The fear of losing touch with family and friends is the main reason for not going ahead with downsizing, the study found. Around 70 per cent of advisers say clients dropped plans to downsize because of family ties.
Nearly half of advisers (47 per cent) questioned said clients could not find suitable homes to move to while 37 per cent blamed the cost of moving and feared they would not make enough money.
The struggle to move is reflected in Land Registry data showing property sales in England and Wales fell 15 per cent in February to May compared to the same three months a year ago. The monthly average of sales was 61,283 compared with 70,029.
In May sales were 15 per cent down on a year ago. One of the biggest drops was in the number of sales of houses valued between £200,000 and £250,000 which fell by 26 per cent.
Andrea Rozario, chief corporate officer at Bower Retirement Services comments:
“Downsizing is logical and sensible and should work for many over-55s homeowners if they can find the right house at the right price.
“It is clear however that it is not that simple as there are financial issues to deal with when moving house with stamp duty alone costing 5% on house prices above £250,000 which can make the decision to move uneconomic. Buying a £300,000 home would cost around £5,000 in stamp duty.
“When you add that to the emotional wrench of moving home with the risk of losing touch with family and friends it can make downsizing seem a bad idea.”
The Bower research shows attitudes are shifting on leaving an inheritance – 63 per cent of advisers said their older clients are less worried about leaving money now with the main reason being that children are financially well-off.
