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The home ‘right-sizing’ challenge

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Nearly a third of people aged over 55 feel their home is too big, too small or isn’t right for their needs as they get older. We examine the ‘right-sizing’ challenge facing many 55+ households.

It’s an issue many households in the last few years of their working life and beyond retirement face – is my home the right size for my needs and how do I cater for my future requirements?

Government  statistics show that nearly three quarters of homes in England are owned outright or mortgaged to somebody over the age of 45, with half attributed to those aged over 55.

We commissioned a survey in the first quarter of 2022 of more than 2,000 over 55-year-olds to obtain a picture of what this demographic want from their home and what they plan to do going forward. We highlight some of the key findings below.

Large homes but underoccupied

Nearly six in 10 (58%) over 55s live in either a detached or semi-detached home, with 19% living in a terraced house. Elsewhere, 14% call a bungalow home and 7% live in a flat.

Nearly three quarters of people (73%) live in a home with three or more bedrooms, with 24% living in a home with two bedrooms.

However, the large majority of respondents (84%) either live on their own or with one other person, meaning the size of their home doesn’t match the number of occupiers.  

Four in 10 over 55s have considered or taken out equity release

Our research shows that 84% of over 55s own their property outright, with the remainder owning their home with a mortgage, suggesting a lot of equity tied up in properties.

Whilst only 5% have used an equity release product to raise finance from their home, 34% would consider releasing cash from their property.

The most common reason for those considering doing so is to fund home improvements (50%), clear debts (33%) or pay for a holiday (19%). Other reasons include supplementing retirement income (16%) or gifting the money to children or grandchildren (13%).

Finding a home that’s the right size

Three in 10 over 55s feel their home is too big (11%), too small (5%) or isn’t right for their needs as they get older (14%). Of those who felt their property is too big, 71% plan to move in the next five years, with a bungalow (62%), detached home (36%) and flat (29%) the preferred property types.

Seven in 10 people said they wanted to move to a property with either one or two bedrooms, whilst 10% said they would consider moving to an assisted living style property.

What people want from a new property

When considering what factors are important in a new property, cost was the most significant aspect, cited by 74% of respondents. This was followed closely by selecting a property that meets the individual’s needs as they get older (71%) and, unsurprisingly given the current energy cost crisis, how energy efficient the property is (65%). Other important factors included the size of living areas (60%), proximity to public transport links (54%) and open space nearby (54%).

Cash is king

Over half of over 55s (52%) said they would hold any financial windfall from their property in cash savings, with 28% saying they would invest in a mix of assets.

Meanwhile, 28% indicated they would gift some of their windfall to family, with 26% saying they would spend part of the money on a big ticket item such as a holiday or car.  

Derek Sprawling, Paragon Bank Savings Director, says: “Housing is a challenge for many households as their home becomes bigger than their needs. Many people still live in the homes in which they brought up their families and finding the right property to move to that will suit their current and future needs can be difficult.

“Many people over the age of 55 are looking to either move home or to release equity from their property to raise cash. With half of people choosing to keep that finance in a cash savings account, it’s important they select the right account for their needs and which offers them the best returns. They may wish to consider locking some away in a fixed rate account, whilst holding some back in easy access accounts.”

If you would be interested in sharing your personal experience of downsizing please get in touch. We would love to share your experience to help others on a similar journey. Please email Insights Manager Sandeep Klare at [email protected] 

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Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551