09 Aug, 2018/ by Homeward Legal /Sale & Purchase
More retirees than ever are looking to downsize their homes for a smaller property. However, many are struggling to make a sale or achieve a top price because their property needs a lot of work done on it.
New research from independent equity release advisor Key shows that around 1.4 million over-65s are considering downsizing within the next five years. According to their research, 44 percent of estate agents have seen a rise in enquiries from homeowners in that age bracket in the last year.
Chief reason for looking to sell up and buy a smaller home is the need to save money, with the need for a more manageable property the next most popular reason for downsizing.
Unrealistic expectations on price
The Key research quotes estate agents saying that those who do manage to sell up release on average £46,000 from their property while also reducing their household bills.
Worryingly, however, estate agents say one in three downsizers have tried and then given up on selling their home in the last two years. Two out of three said the main barrier to selling was that their décor was outdated, but more than half said the property's poor state of repair made it impossible to sell.
Another issue is unrealistic expectations of the price that can be achieved on the open market. According to the estate agents who took part in the research, many sellers expect a much higher price for their home than they can actually achieve.
And another substantial barrier to downsizing is finding suitable homes to move to. The vast majority of participating estate said there is a serious shortage of homes for retired people to move to, with even fewer properties suitable for the less mobile coming on the market.
Shortage of suitable homes
Dean Mirfin, chief product officer at Key, said: "There are substantial financial gains to be made from downsizin,g but estate agents suggest it is unfortunately not the quick and straightforward process many think, with one in three downsizers giving up on sales in the past two years.
"Sales can take longer than expected because pensioner'' homes are not to the taste of some buyers or need major repairs.
"It may make financial sense for sellers hoping to make money to invest in home improvements before putting their houses on the market, but with some looking to make money by downsizing, they may simple not have access to the cash.
"Arguably, the bigger issue is that there is a shortage of suitable homes for sale for retired people. In turn, that has a knock-on effect as retired homeowners don't sell, which reduces options for younger buyers.
"What is clearly evident from this research is the fact that when we consider the reasons why older homeowners look to downsize, it is not always necessary and there are other options which they can consider whilst remaining in their homes."
Equity release one way to remain in home
Equity release is one way older people can remain in their homes with a number of products on the market that allow them access to the cash tied up in their property while remaining there in the long term.
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