Downsizing homes results in as many as one in four people losing money, according to a new survey by financial services provider OneFamily.
As many as 20 per cent of respondents in the survey indicated that they had no choice but to downsize, in order to boost retirement income, while 43 per cent of older homeowners moved to smaller properties, in order to unlock cash tied up in old homes.
Changes to housing policy in recent years have been responsible for downsizers ending up out of pocket, with “legal feels, stamp duty, moving and renovation costs [were] eating into their profit,” according to OneFamily.
The report followed news that an increasing number of mortgage options have become available to older homeowners, according to research by Moneyfact.
Downsizers feel out of pocket
Downsizers found that they gained £105,900 on average when selling up their properties – £28,650 less than they anticipated, according to OneFamily. Also, 48 per cent of respondents believed associated moving and renovation costs were more expensive than expected, with moving costs totalling £12,480 on average for downsizers, the survey estimated.
Some 13 per cent indicated that they preferred to stay in their existing properties, but one in five claimed they had no choice but to sell up, in order to boost incomes ahead of retirement.
OneFamily found that it took downsizers over seven months to receive funds from the start of the selling process while 41 per cent of those surveyed said they intended to downsize to live in bungalows. However, OneFamily also stated in their report that the supply of bungalows has been in short supply.
Pensioners feel the pressure
Nici Audhlam-Gardiner, managing director of lifetime mortgages at OneFamily, said: “It’s great that many people now have longer active retirements, however, they come at a cost and many pensions won’t stretch far enough.”
Ms Audhlam-Gardiner added: “Many retirees feel they have no choice but to downsize but there are different ways of releasing capital to fund later years. It’s unsurprising that many people don‘t want to move, as they will have just got their home just as they like it, and moving to a new house is often stressful and expensive.”