Two Thirds Of Retirees Plan Not To Downsize

More people choosing equity release

Two Thirds Of Retirees Plan Not To Downsize

Estimates from research conducted by Canada Life have suggested that an increasing amount of people will look to raise income by releasing equity from their homes and nearly 14 million plan to keep their current property rather than downsize.

With an increase of 5% since research conducted in 2016, over two thirds of adults say they will remain in their current home when they retire, compared to just under a quarter who stated they would look to downsize.

Alice Watson, Head of Marketing and Communications at Canada Life Home Finance, said:

“The findings from this research are important given the current concerns surrounding how people will fund their retirement. Whilst average life expediencies continue to increase, people will need to spread their savings further in later life.”

An option that is growing in popularity is equity release, an option 6% of respondents stated they would do.  Figures from the Equity Release Council show that amounts lent in the first two quarters of 2019 had more than doubled to £1.85 billion since 2016.

There are many reasons why people are becoming more keen on ‘staying put’ in retirement, such as a need or desire to remain in an area, family reasons or the actual cost of moving.

On speaking to The Times, Marlon Lloyd Malcolm of estate agency Lurot Brand:

“Larger properties with higher price tags are harder hit on their value in down markets.  You will take a large discount on what you are selling and a smaller discount on what you are buying. The net result is not favourable; throw in stamp duty and the whole process becomes a large loss of equity.”

With house prices having increased by more than 280% in the last 30 years it may not be surprising that retirees are looking to take advantage and release equity from their homes.  One of the main reasons for equity release, found by Canada Life, was to make improvements to their properties for both comfort and accessibility.  Clients may also want to have the opportunity of helping family when they need it, perhaps even helping them get on the property ladder, whilst letting them see and enjoy the benefits of their help and possibly saving on future inheritance tax.

Alice Watson continued:

“Few people are budging in retirement. Instead, they are ageing in place, preferring to remain in their own homes for as long as possible… Whatever people’s motives, it’s important that the industry makes clear that equity release is a way for people to retain ownership of their property, age in place and boost their retirement income.”

Natasha Harding

Having previously worked as a wedding photographer for 14 years, a change in family circumstances gave me a taste for family law, particularly in divorce, child custody and especially parental alienation. I am now doing an LLM in Legal Practise with the aim to work within the legal industry, specialising in family law.

1 Comment

  • Conveyancing stress is a factor that should not be discounted.

    I understand that the “retirement flats” (aka “geriatric filing cabinets”) sector depends on this. A buyer (typically a 78 year old recent widow) is told that the developer will do everything including taking on her present home at, of course, a significant undervalue. She doesn’t have to accept this and is always told that she free to do things the hard way.

    Yesterday I was at a discussion on intergenerational wealth. (Google Resolution Foundation) It inevitably addressed the problem of housing wealth and I raised the danger posed by equity release.

    Where a house owner downsizes a property is released into the market and available for up sizers Equity release means that money is released but property remains (usually under-) occupied and unavailable to up sizers and lower strata of them

    This risks the perfect storm with too much money chasing too few homes. Rampant inflation

    There are many reasons for having a more mover-friendly system but encouraging downsizing is an urgent one

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