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Less than a third of people who plan to downsize make the leap

by | Mar 27, 2023

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While a third of over-45s (29%) say they have plans to downsize in the next five years, just 13% of over-75s have actually made the leap reveals new data from the UK’s leading equity release adviser Key Later Life Finance shows.

While the ideal age to downsize is seen as 66 years old as people assess their retirement finances, ties to the community, their homes, and the security it brings mean that most people choose not to proceed.  

Key’s research with 1,000 homeowners aged 45-plus looked at attitudes to downsizing to a smaller home, taking in the potential financial benefits such as releasing property wealth and cutting bills while also examining worries about falling house prices and losing touch with memories.

Home is where the heart is:

While 29% of over-45s are considering downsizing, 70% are keen to stay in the home that they live in for the rest of their lives.  A third (31%) say that the house they live in is the right size for their needs and a smaller house would not work and 25% agree saying that they are already in their forever home and have no desire to move.  

A fifth (23%) say they are attached to the community they live in and don’t want to move while 22% said that even thinking about moving is exhausting.  Almost one in five (16%) say that they would not see any financial benefit from downsizing if the estimated £9,611 costs were taken into account.

Community, reassurance and security provided by property grows with age:

Homeowners attachment to their property grows as they age with 52% of those aged 75-84 saying that their home provides reassurance as they know how everything works which is twice the amount of 45-54 year olds (26%) who felt this way.  Community also plays a big part and 57% say that that their home gives them confidence as they know their neighbours and their community which is significantly higher than the younger generation (31% – 45-54 years old).

 All45-5455-6465-7475-84
Pleased as it suits me and my needs well47%38%48%54%62%
Security as this is my haven45%43%44%50%45%
Confidence as I know my neighbours and community35%31%32%41%57%
Happiness due to good memories34%33%34%36%32%
Reassurance as I know how everything works32%26%29%39%52%

Economic Factors Drive Downsizing:

Interestingly, economics drive many downsizing decisions rather than the desire to live in a property which is better suited to supporting someone as they age.  Almost half (43%) of those looking to downsize or have made this move say that a smaller property is easier to upkeep while 38% are looking to reduce the cost of running their home and 27% want to improve their retirement finances.

One in five (17%) said the cost-of-living impact on running a home has pushed them to consider downsizing, 8% did it to release cash to support their families and 5% saw the proceeds as a way of repaying debt. 

Will Hale, CEO of Key, the UK’s largest equity release advice firm said: “As people age, downsizing is often suggested as an opportunity to release some of the value tied up in their homes and find a property which is more age appropriate.  However, this research suggests that as people age, their home as well as the community they live in provides them with confidence, reassurance and security with the main driver behind any potential move being economic necessity.

“For some downsizing is the right answer.   However, for others finding a way to boost their retirement finances while staying in the property they love – and can afford to adapt – and the community they know is a better option.  A home is much more than a roof over your head and can provide security, confidence and reassurance as people age.

”Speaking to a specialist adviser who can help you explore your later life borrowing options such as equity release and retirement interest-only mortgages is important as it provides you with a better understanding of all your choices rather than just defaulting to downsizing.  

“Choosing to take out a later life lending product also does not preclude downsizing in the future either.   Indeed, modern equity release products include features such as downsizing protection and with the ability to serve interest, older borrowers can carefully managing their borrowing to ensure they keep all options open as their circumstances may change through the years.”

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