Pensioners missing out on £150k windfall by not downsizing their property | Personal Finance | Finance
Only 14 percent of retirees or those near retirement want to move home, according to new research from Churchill Retirement Living, but that hesitancy could be costing pensioners dearly and causing them to miss out on a massive cash boost. An average retiree is estimated to make £150,000 from downsizing, and it is thought that the reticence of pensioners to move house is negatively impacting the housing market.
By taking the plunge and downsizing to a retirement property, not only can retirees put extra cash in their pockets, but they could also help stimulate the property market for younger generations. Churchill Retirement Living’s data revealed that for every retirement property purchased, an average of two to three further purchases are stimulated in the housing chain, unlocking properties for first time buyers and young families.
Spencer McCarthy, CEO of Churchill Retirement Living, has given his thoughts on why downsizing could be an idea worth exploring for pensioners. He said: “We often see downsizing as something that comes about through necessity rather than as a positive choice, but new figures show just how much there is to benefit, not just for those who take the plunge and do it for themselves, but also for their families and society as a whole.
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Mr McCarthy said that downsizing has an unwarranted bad reputation in the UK, and dispelled some of the misunderstandings that may exist. He said: “Another barrier is the misconception about what downsizing needs to look like, and this is another typically British problem. Unlike other countries where the concept of retirement living is widely accepted as a logical step on the housing ladder for older people, in the UK we tend to put specialist retirement housing in the same category as care homes, or assisted living, which frankly is miles from the reality.
“Anyone who visits an independent retirement living development can see for themselves that they are vibrant communities which enable people to enjoy an independent, active lifestyle for longer. Such developments offer comfortable, low maintenance apartments, with the option to make new friends and socialise in the various communal spaces. Usually located in the heart of town, these places help support local economies and improve the health and wellbeing of those who live there, while also reducing the need to travel by car as you get older,” Mr McCarthy added.
He also emphasised the benefits for the market as a whole of pensioners downsizing their homes. Mr McCarthy said: “Encouraging more people to downsize is also key to freeing up homes for families and first-time buyers. A recent report by Homes for Later Living revealed that for every person downsizing to a retirement property, an average of two to three properties are released further down the housing chain, and roughly two out of three downsizing moves lead to a first-time buyer getting on the ladder. Freeing up more housing supply is a desperately needed intervention to solving our housing crisis and normalising the market.”
Downsizing could provide more freedom and flexibility for pensioners in retirement, with 28 percent of people surveyed saying they would use the additional money to top up their pension. 41 percent said they would put the funds towards inheritance for their family, which shows the potential social benefits being able to access this money could have for millions of older people.
Mr McCarthy also said that moving into a retirement property can help more people live safely and independently as they get older. He said: “As things stand, millions of older people are staying put in homes ill-suited to their changing needs, leaving them more at risk and increasing the pressure on an already fragile system.
“If we all want to continue living safely in a home of our own as we get older, we need more housing specifically designed for that purpose, and by embracing the benefits of downsizing we can all live happier and healthier for longer, with potentially a windfall along the way.”