OFFPLAN NEWS

(31.05.2007 )
Cheap property in England Downsize strategy in England may not perform
Bad news for people who consider selling their property for a less expensive one.
Many Britons planning to downsize or move to another area as part of their pension strategy may be in for a shock, says Prudential.
A new report from the insurer called, ‘Cost of moving home in the UK’, reveals that moving costs are a massive Ј6,200 on average – or up to Ј13,500 in London.
This is particularly bad news for people whose reason to move is to release equity, as these moving costs – stamp duty, legal fees, estate agents and removal fees – all eat in to their released cash.
If that wasn’t bad enough for these potential ‘downsizers’ (a downsizer being someone moving to a less expensive property to get their hands on some extra cash), two-thirds will be out of pocket. Only those who own detached houses or live in London and the South East, can hope to release over Ј50,000 by downsizing, says the report.
For the 18 million Britons who claim that property will form part of their pension, this may come as a shock. The gap between income in retirement and desired income in retirement is Ј4,000 on average. That’s over Ј100,000 for a retirement of 25 years.
And although Ј1,100 billion is tied up in equity in UK homes, it will prove for many that they are unable to access this cash by moving home.
Downsizing only works for some regions
Only a move from London and the South East would release more than Ј50,000. The table bPeople living in Northern Ireland cannot move anywhere to release equity. A move would cost elow shows that moving from London would release at least Ј99,000, no matter which region a person moves to. Moving from a similar size property in the South East to the North would release Ј60,256.
The vast majority of regions within the UK would not be able to release cash by moving.
them money. The same is true for a number of different regions.
This does not even include the moving costs. If someone in the South East wanted to move to the South West, and remain in a similar sized house, they would only gain Ј20,720 in equity. Almost a third of that would be used in moving costs, leaving them with only Ј14,520.
Half the population want to move location. Of those, the most popular choices are abroad (9 per cent), the South West (7 per cent) and the South East (5 per cent). The bad news is that none of these choices will release large amounts of equity.
The other half of the population want to stay in the same area. For them, if they want to release equity, the only option is to move to a much smaller property. However, Pru’s research reveals that moving from a semi-detached house to a terraced house in the same area will not release more than Ј40,000, no matter where a person lives.

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