Posted on 24th October 2015

Is it too Expensive to Downsize?

Martin Williamson, Head of Residential Property

Those of a certain age are often given short shrift when it comes to their part in the housing market. Blamed for the property equivalent of hospital bed blocking, theyre said to be unwilling to move from large homes to allow growing families to move in, thus paving the way for first-time buyers at the bottom of the ladder.

But, the reality is often very different. Several retirees have spoken out recently about the issues they face trying to buy a smaller property.

The problem is, even if a property is larger than a couple or individual would like, buying a smaller home can often be more expensive than the price they are able to command for their existing house. After all, a home doesnt just have to have fewer bedrooms to be manageable for an older person, there are often other requirements too.

It may be that they have become too infirm to manage stairs, so need a single-storey home. A quick search for property in Darlington, reveals that the cheapest two-bedroom bungalow is £115,000 while the cheapest four-bedroom house is £75,000. In Durham, the picture is the same. The lowest priced bungalow is £170,000 while four-bedroom homes start from £155,000.

Factor in other needs such as a requirement to be close to shops because someone isnt able to drive anymore, or the desire to relocate to be closer to adult children and grandchildren, who live near centres of employment, and its easy to see why downsizing isnt always a viable financial option. On top of the price of the property are other costs such as estate agents fees, renovations and stamp duty.

Its also increasingly unlikely as you age that you will be able to get a mortgage and many people would not want to take out one as they reach or go further into retirement. There is also, of course, the emotional aspect to take into account. It can be understandably hard to sell a home where youve brought up a family and made happy memories there.

Despite all of that, older home owners have come under fire by politicians, market regulators and prospective first-time buyers for cutting off the supply chain of family homes coming onto the market.

Recent research found that there were more than three million over 55s who would be willing to downsize. But many of them are unlikely to be able to do so unless it becomes easier for retirees to fund a move.

Mortgage experts at the Financial Conduct Authority have already called for older home owners to be given more encouragement to move out of homes which have outgrown them. They urged ministers not just to concentrate on first-time buyers with their policies, but to look at the top end of the market too.

The Royal Institute of Chartered Surveyors has also called for better incentives to help homeowners move into specialist retirement or smaller properties.

If those calls are heeded, we may see schemes in future years such as those already launched for first-time buyers which will assist existing home owners who want to downsize as they reach retirement.

Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.

Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise.

For further information please contact Martin William