Four million over-55s plan to downsize

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Nearly four million homeowners aged over 55 have plans to downsize, according to a new survey.

But despite the chance to make an average of £112,000 by selling up, the convenience of having a smaller home is more important than raising cash.

The nationwide study by Prudential found nearly half (47 per cent) of over-55 homeowners plan to sell and move to cheaper homes in later life.

On average, they expect to raise around £112,000 in equity by downsizing, with around one in 10 (11 per cent) expecting to make more than £200,000.

However, the main reason given for downsizing is the convenience of running a smaller home in retirement - with nearly three-quarters (74 per cent) rating convenience as their main reason for downsizing.

That compares with just 28 per cent who said they were doing so to mainly to release cash for retirement.

Other factors come into play on the decision to move - just over one in three (34 per cent) said having a smaller garden was a major motivation.

However, worries about a shortage of homes suitable for retirement, fees and high property prices are the major reasons deterring some older homeowners from downsizing, the study found.

A lack of suitable available housing is the main reason over-55s believe downsizing is not more popular - nearly four in ten (38 per cent) blamed the lack of suitable houses, while 24 per cent cited the cost of moving in terms of stamp duty, solicitors and estate agents, and 17 per cent say high house prices put people off.

Of those who expect to raise money from downsizing 60 per cent will use it to boost their retirement funds and improve their standard of living.

Almost half (47 per cent) will use the cash for travelling more, while (13 per cent) want to release equity to help their children buy a house and 14 per cent will simply give the cash to their children.

Vince Smith-Hughes, a retirement income expert at Prudential, said: “It is interesting to see that these figures challenge the common theory that ‘my house is my pension’.

“Although we see a large proportion of those taking equity from their homes to boost their retirement incomes, most people have accepted that the main reason they need to move home in later life is for convenience.“