Retired home owners in UK looking to downsize, research shows
One in four retired home owners in the UK hope to raise £62,000 by moving into a smaller home, new research shows. The top three reasons for doing so are convenience, raising money and cutting bills, according to the study from the Prudential. It also reveals that 73% of the UK’s 10.4 million pensioners own their own home and 26% expect to sell their property to raise money or simply to make their life easier.
Out of those looking to sell their property 81% are planning to buy another property. This is equivalent to around one million homes being bought and sold by pensioners, many of whom will release substantial amounts of cash by downsizing. The majority, 73%, of retirees who plan to sell up and buy another property want to move into a smaller and less expensive home. On average, they expect downsizing to raise as much as £62,000. Some 23% plan to use the money raised to boost their income in retirement, 13% will pay off debts and 8% say they’ll use the money to help with everyday living costs.
Prudential’s research also shows that 22% of retired home owners still have an outstanding mortgage, with average monthly payments of £254. The convenience of running a smaller home was the most commonly stated motivation for those who plan to downsize with 48% saying they want a simpler life. Separately, 22% claim raising money is the main driver for their sale, while 11% want to reduce household bills.
Quote from PropertyForum.com : “Mortgages in the UK are at their most affordable for 14 years with payments as a proportion of income 21% lower than in 2007, according to new research.”
‘Housing wealth is potentially a significant source of additional retirement income for pensioners who own their own home. This is why so many of Britain’s pensioners are planning to become last time buyers,’ said Stan Russell, retirement expert at Prudential. ‘However, it is dangerous for people to assume that housing wealth can make up for a lack of retirement planning. To ensure a comfortable retirement it is important to start saving as much as possible as early as possible, and to seek professional financial advice on the best retirement income options,’ he added.
Staying on the property ladder remains the overwhelming preference among retired home owners. Just 6% of pensioners planning to sell their home intend to move into specialist retirement accommodation, while only 4% expect to move into a rental property. ‘For some retired home owners, moving to a smaller home is a lifestyle choice, but for a significant number the decision is a financial one. Our research also shows that the majority of retired home owners expecting to sell their property plan to buy a smaller home rather than rent, saving themselves on average £168 per month on the difference between average mortgage and rental costs,’ explained Russell.