23rd September 2014
Retirees are set to release nearly £137 billion from their properties by downsizing over the next five years, new figures reveal.
Nearly 1.4 million people, representing 12% of the UK’s retired population plan to move to a smaller home to unlock cash, according to MGM Advantage, the retirement income specialist.
They are set to follow nearly two million pensioners who have already done so, the survey shows.
By analysing house price data, calculating the amount of cash released through moving from a detached property to a bungalow allowing for stamp duty and moving costs, MGM Advantage has worked out the average UK downsizer has the potential to release £102,8512.
This figure represents an 18% increase in the potential cash that could be released a year ago when the average was £84,776, which is down to the increase in the value of a detached properties compared to bungalows
The potential cash available to downsizers around the country varies significantly, from an average of £295,593 in Greater London to just £54,301 in Wales.
Andrew Tully, of MGM Advantage, said: “People often refer to their property as their pension, and these numbers show that many are considering downsizing to provide an income boost in retirement.
“However, the downsizing dream could turn into a retirement nightmare, as some areas of the country fare much better than others. This is simply a reflection of the housing market in the UK.”
Tully warned savers against banking on their own home to provide an income in retirement.
He said: “The old adage of all your eggs in one basket still holds true. Careful planning and consideration should be given before making the move, and with returns available from the cash released still very low, it is likely the capital will also be consumed over time.”