Older and retired home owners in Britain who want to downsize are struggling to sell their homes and often have unrealistic expectations on price due to dated décor and properties in poor repair, new research suggests.
Estate agents are seeing a surge in inquiries about downsizing with 1.4 million over 65s saying they will consider downsizing in the next five years but one in three would-be downsizers have given up on selling in the past two years.
However, they are warning that these houses are often harder to sell because they need a lot of work, according to the research from independent equity release advisor Key.
The survey found that overall 44% of estate agents have seen a rise in inquiries from owners aged 65 and over looking to downsize in the past year with 80% citing the need to save money as the reason while 78% said they wanted to have a more manageable home.
The survey also shows that 63% want to move to an area more suitable for retirement such as the countryside or the coast, 56% want to pay off a capital repayment mortgage, 43% want to boost their retirement income, and 34% want to raise money for family.
For those downsizers who do manage to sell their properties, estate agents estimate that they manage to release on average £46,000 in addition to reducing their household bills. However, estate agents say that around 32% of downsizers have given up on selling in the past two years.
Estate agents point to major barriers to selling with 66% due to dated decoration and 56% due to the property being in a poor state of repair while 63% of estate agents say sellers expect higher prices for their home than they are likely to receive.
And downsizers also run into problems with finding suitable homes to move to. Around 77% of estate agents believe there is a shortage of homes for retired people to move to while 80% say there is a lack of homes suitable for those who are less mobile.
‘There are substantial financial gains to be made from downsizing but estate agents suggest that it is unfortunately not the quick and straightforward process that many think with one in three downsizers giving up on sales in the past two years,’ said Dean Mirfin chief product officer at Key.
‘Sales can take longer than expected because pensioners’ 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,’ he pointed out.
He also pointed out that 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 home owners don’t sell which reduces options for younger buyers.
‘For those electing or wanting to stay in their homes equity release is proving a viable solution for adapting and maintaining their homes and 63% of those releasing equity from their homes in the first half of this year did so for home and garden improvements, typically involving major projects such as new kitchens and bathrooms as well as garden landscaping,’ he explained.
‘What is clearly evident from this research is the fact that when we consider the reasons why older home owners look to downsize, it is not always necessary and that there are other options which they can consider whilst remaining in their homes,’ he added.
