Pandemic leads to surge in ‘forever homeowners’ who don’t want to downsize

More people over 55 now want to stay at home rather than downsize into their old age, after the pandemic prompted them to value space more and stay within a supportive community.

According to research by Legal & General Financial Advice, the number of over-55s who want to downsize in the near future has fallen by 200,000 in the past three years.

The latest study found that potential downsizers made up 24 percent of all households age 55 and older, representing 2.9 million households.

Stay put: Fewer older people are thinking about downsizing – even though they think they can earn an average of £150,000 in cash if they do

Stay put: Fewer older people are thinking about downsizing – even though they think they can earn an average of £150,000 in cash if they do

When Legal & General last analyzed the market, in 2018, this figure stood at 26 percent of households, meaning there were 3.1 million potential homes for sale.

When asked why their plans had changed, the main reason was that they didn’t want to leave the community they lived in.

Many said the Covid-19 pandemic had emphasized the importance of having friends and family close by.

Sara McLeish, chief executive of Legal & General Financial Advice, said: ‘The impact of Covid-19 has clearly changed the mindset of many elderly homeowners, and we can see an improvement in those looking to keep their homes. .

“Priorities can change over time, and it’s only natural that over the 16 months people have grown closer to their local community, appreciated having family close by and enjoyed the space.” to relax while they were in lockdown.’

Due to the lockdown, we spent more time in our homes than ever before, which also influenced the decision not to downsize.

Nearly 3 million would still consider selling their homes and moving to smaller premises

Nearly 3 million would still consider selling their homes and moving to smaller premises

Nearly 3 million would still consider selling their homes and moving to smaller premises

One in four (24 percent) said they liked having more space during the lockdown and didn’t want to give it up, while another one in ten (13 percent) said they had decided to live in their current home. invest instead of moving .

However, Legal & General said there are still 2.9 million older households who can sell their homes in their golden years.

Almost a quarter of the over-55s who had not sold their home indicated that they were still considering phasing out, but wanted to make a decision first about their financial situation (12 percent) or were uncertain about the current housing market (10 percent ).

“Our research suggests that many over-55s are still open to the idea of ​​moving, but think about it before making decisions, so we may see a shift in attitudes now that the lockdown has eased,” added McLeish.

Downsizers expect a £150,000 windfall

Those who choose to downsize could get a £150,000 windfall, according to a separate study.

The survey commissioned by Churchill Retirement Living, which surveyed 2,009 people aged 60 and over, found that one in ten believed they could free up between £250,000 and £500,000 in equity if they moved to smaller premises. to move house.

On average, people said they would expect a £150,000 windfall. That rose to an average of £295,000 for London housing.

FACT BOX TITLE

Perkins says downsizing to a retirement village gave him a 'fresh start'

Perkins says downsizing to a retirement village gave him a 'fresh start'

Perkins says downsizing to a retirement village gave him a ‘fresh start’

Barry Perkins, 89, has recently been belittled for moving into an apartment in a Churchill retirement village in Newquay, four years after his wife passed away. He said:

‘After the death of my wife, I was in a difficult situation. Now that I’ve moved, I’m starting to accept the loss. While nothing can replace her, I feel like I’ve made a fresh start, even at this age. I now see my future years in a much more positive light.

“I’ve moved seven or eight times in my life and met all kinds of different people, and I’ve never met a better group of people. There is always something to do to keep you busy.

“Now that restrictions have been lifted, people will continue to feel isolated. Retiring could be a very good step for them. It certainly was for me.’

Many elderly admitted that they lived in houses that were too large to meet their daily needs. More than a third (36 percent) who lived alone reported having at least two spare rooms, while two-thirds (65 percent) of those living in a couple had at least one spare room.

Three in ten said they had a room that they used solely for storage.

Downsizing of the elderly is important for a healthy housing market, because larger homes are becoming available for young families.

Fewer larger homes available can cause prices to rise, making it more difficult for families to find the space they need.

When asked how they would use the potential revenue from downsizing, a significant proportion said they would use it to supplement their pensions (28 percent) or spend it on their family’s inheritance (41 percent).

Nearly 1 in 3 (29 percent) said they would spend the money on a family vacation or trip, while 7 percent would simply spend it on their social life.

Churchill Retirement Living chief executive and chairman Spencer McCarthy said: “These latest findings are a clear signal that not only are there better options for quality of life, but huge opportunities for people to spend more time doing the things they enjoy.” such as family, vacation or helping others’.

However, there are also compelling reasons for many homeowners not to downsize.

For those who hesitated, the main barriers were that they loved their current location too much (45 percent) and they weren’t sure they would find a suitable place (33 percent).

Meanwhile, more than one in four (27 percent) said they were too attached to the property for sentimental reasons.

Should I Consider Stock Release?

One way to access the money tied up in a home without downsizing is to take out a lifetime mortgage, also known as an equity release.

This is when a lender advances some of the money tied up in a home to an owner over the age of 55, provided they have paid off their mortgage.

The balance is then repaid with interest after the owner dies or enters long-term care.

“For those who don’t want to move, unlocking some of the equity tied up in their home can therefore be a huge help, especially when it comes time to make a home fit for old age,” says McLeish.

“While this may be a lifeline for some, it’s important for anyone considering this route to consider all your options and get some good advice before doing this.”

Is equity release for me?

According to Key, the share release provider, 557,000 Britons have used share release over the past 20 years, releasing more than £32 billion in cash.

Equity release is a form of mortgage that effectively advances a portion of a home’s value to a homeowner over the age of 55 while still living in it.

The balance, plus interest, is then paid off through the sale of the home if the owner dies or goes into care.

Downsizing is another option older homeowners can consider

Downsizing is another option older homeowners can consider

Downsizing is another option older homeowners can consider

Historically, stock releases had a controversial reputation. This was partly due to the fact that in the early days there was no possibility to repay until after the borrower’s death, which caused interest to rise.

But the industry has exploded in recent years as interest rates have fallen and borrowers have been given the option to pay interest while they’re at it, as well as “withdrawal” options that allow them to gradually withdraw money and only pay interest on the amount they have withdrawn.

While options in the sector have improved, some experts argue that releasing stocks should still be a last resort to fund pensions.

A concern is the fees charged by lenders for paperwork when borrowers want to change their plans.

For example, a study by This is Money’s sister title, Money Mail, found that a major lender charged £600 in handling fees.

The costs have also been compounded as decisions to release shares can only be made after consulting with an independent advisor – who can add thousands of pounds to the bill.

In addition, taking wealth from a property means that there is less inheritance left for the owner’s family – although they can choose to donate a portion of the proceeds from their wealth dispensation to them while they are still alive.

Alternatives to releasing shares are a regular remortgage and an interest-only mortgage.

Some links in this article may be affiliate links. If you click on it, we can earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

.