Increasing numbers of retirees don’t want to sell their family home and move to a smaller property, according to Just Retirement.
This reluctance to downsize is based on the high financial and emotional costs involved and will create demand for alternative options such as equity release, says the retirement specialist.
It conducted a major study into consumer attitudes towards housing equity withdrawal that found considerable resistance to the idea of downsizing among the 1,000 homeowners aged over 55 who took part.
“The traditional view is that downsizing is a way older people can free up some capital and cut their living costs,” said Stephen Lowe, group director of external affairs and customer insight at Just Retirement. “What seems an easy financial decision from a practical point of view is often a huge emotional wrench that people seem keen to avoid.”
The report, The role of housing equity in retirement planning, found that 55 per cent of homeowners had lived in their homes for more than 25 years and a further 24 per cent had bought between 16 and 25 years ago.
Lowe said: “Of those with between five and one year to retirement, about half said they would rather sell up than use equity release, but this number fell to just over a third of those actually in retirement. Interestingly, a few had downsized and been disappointed by the results after the costs were taken into account.”
Reasons to avoid downsizing ranged from the emotional to the practical and financial:
- No wish to leave cherished home close to friends or family
- The need for extra space to accommodate possessions and visiting family
- High selling, repurchasing and moving costs eating into any value released
- The hassle of home-hunting and difficulty of finding somewhere suitable
- Lower future house price gains from a smaller home.
Lowe added: “Equity release offers a quick way for those who can’t or don’t want to move to generate a lump sum or income. This is wealth they have accumulated over the long-term and they are naturally keen to want to choose how best to use it.”
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