The equity release provider believed that downsizing should be one of the first options considered when looking to release equity, although the costs accumulated from the process, such as Stamp Duty, local government searches and VAT on estate agency fees, would eat into the sum released.
In Retirement Services calculated that the average move would run up costs of between £5,800 and £7,800, with the figure doubled in areas such as Greater London.
With around 5.4 million of those over 65-years-old living in a property with two or more spare rooms, with a further 1.2 million expected by 2021, removing costs would have a significant impact; both for pensioners and younger families looking for family home.
Daren Carter, managing director of In Retirement Services, commented: “There is a shortage of larger properties available for families and with an ageing population, this problem is only going to get worse. If elderly people could move and downsize in a more cost-neutral way, they could not only release cash but also the much needed housing stock for families.”
Stuart Wilson, managing director of Equity Release Advisory Service, said: “Personally, I would rather see the government spend money on a better state pension. It’s a great idea but it’s not really practical and it would only benefit more affluent home owners, rather than those who need the most help.”
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