£136.5bn boom in next five years from property downsizing

New research from MGM Advantage, the retirement income specialists, shows 12% of the UK’s retired population are planning to downsize their property within the next five years, potentially unlocking an estimated £136.5bn of housing equity in the process.

This equates to 1.36 million people planning to move to help fund their retirement. The data also shows 18%, or 1.99 million retired people, have already downsized.

So how much capital could you release if you downsize your property, and what is the potential income you could generate from the cash unlocked?

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 UK average is £102,8512. This figure represents an 18% increase in cash released compared to just a year ago (when the average was £84,776), and is due to the relative increase in the value of a detached property compared to a bungalow.

The data shows there are significant regional variations, with Greater London releasing the most cash (£295,593), while Wales didn’t fare anywhere near as well with a figure of £54,301 released after moving costs.

Andrew Tully, MGM Advantage commented: ‘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.

‘Banking on your own home to provide an income in retirement does not come without risk. 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. If people want to stay in their homes to avoid the upheaval of moving, then solutions like equity release can provide an alternative route.

‘A professional financial adviser will be able to help you navigate the retirement income maze and decide what is best for your personal circumstances.’