The Intermediary – August 2026 - Flipbook - Page 40
L AT E R L I F E L E N D I N G
Opinion
Downsizing
retirement
“ I would love
[to downsize...]
Unfortunately,
[bungalows] don’t come
up, they’re very few and
far between... [and] lots
of people now want these
bungalows, which is
pushing up the prices...
to go and buy something
smaller is going to cost
us the same as what we’re
selling this for”
hese are the words
of an anonymous
retiree who agreed to
be interviewed as part
of the Department for
Work and Pensions’
(DWP) recent Lived Experiences
of Adequacy in Retirement report.
They stood out to me, because what
she is describing is something many
would-be downsizers experience in
retirement.
In theory, the solution is sound:
sell the family home, buy a smaller,
cheaper property and use the proceeds
to top up your retirement income.
As the DWP paper revealed,
many people view their property as
‘tantamount to having savings’ that
they could draw upon in retirement.
T
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The Intermediary | August 2026
In reality, it is oen far less
straightforward and far more costly
than people expect. Once you factor
in Stamp Duty, estate agent’s fees,
removals and the rest, moving is
expensive. Consumer champion
HomeOwners Alliance (HoA) puts
the average cost of moving in 2026 at
£13,018, based on a £292,000 property.
Supply and demand
But fees are only part of the problem.
The homes retirees actually want are
not being built in the numbers they
once were. HoA found that 38% of
homeowners aged 55 and over would
choose a bungalow for their next
move, yet they made up less than 1%
of new homes in 2024, according to
the National House Building Council.
That mismatch between supply and
demand keeps prices high.
Together, those barriers mean
that many retirees find it simply
isn’t economical to move to a smaller
property, unless they are willing to
uproot to a much cheaper area, further
from family and friends.
This is a problem because we know
that as many as 15 million people
are under-saving for retirement,
therefore increasingly they are going
to have to rely on the equity in their
home. Emad Elhadhal, director, retail
banking at the Financial Confuct
Authority (FCA), said as much in a
recent speech, calling housing equity
a potential ‘fourth pillar’ of retirement
planning, alongside the state pension,
workplace pensions and other savings.
What this highlights is the
WILL HALE
is CEO at Air
importance of puing property high
up the public policy and regulatory
agenda so that it sits on an equal
y serious
footing with pensions in any
discussion of funding retirement.
WP report rightly
But while the DWP
acknowledged downsizing as a
legitimate way of releasing equity,
I was puzzled that it didn’t once
reference lifetime mortgages. As
a product, a lifetime mortgage
can achieve much the same end as
downsizing but without the move,
tion.
fees or the compromise on location.
irst,
I suspect I know why this is. First,
w these
most people simply do not know
hose
products exist. And second, for those
he time they
who are aware, most of the
hese
hold outdated opinions of what these
unction.
products are and how they function.
Most assume that the interest is
always rolled up and therefore eats
