Downsizers turning to equity release as prices rise

Estate agents are seeing growing demand from clients looking to downsize to raise cash with two out of three (66%) reporting a rise in enquiries over the past year. The main reason clients want to downsize is to raise cash with 60% of estate agents saying customers aim to boost retirement income while a third say clients are looking to clear mortgages.

But 72% said that older homeowners have unrealistic expectations about the money they can make.

85% believe prices for suitable homes for downsizers such as bungalows, retirement homes and houses suitable for the less mobile are being pushed up by lack of supply.

42% of estate agents now regularly recommending equity release plans as customers struggle to achieve the savings and extra money they are looking for from downsizing.

Will Hale, director at Key Partnerships, said: “Downsizing is attractive for millions of older homeowners as part of retirement planning as it appears to promise tax-free cash and is clearly driving increased enquiries for estate agents.

“But older homeowners are struggling to achieve their financial objectives with the combination of rising prices and a lack of supply meaning that downsizing simply does not add up for clients.

“Estate agents are increasingly recognising that equity release is a real alternative which enables homeowners to stay in their home and raise cash but it should be part of all conversations with older homeowners considering downsizing, when for many the maths simply doesn’t add up.

“Whilst as an estate agent selling houses is the major revenue driver, where the economics don’t work from downsizing, clients will simply withdraw their properties from sale. Estate agents who increasingly discuss equity release as a potential alternative are able to benefit from an additional revenue stream by referring potential clients to a specialist.”