Britons urged to consider 'increasingly popular' option which helped woman 77, 'free up some money' for retirement

My Future Living, a retirement rental brand, suggests older homeowners may be reassessing their housing needs following the Autumn Budget.

Joanne Couch, Managing Director at My Future Living said: "Downsizing is about finding the perfect balance, a home that fits your needs today and allows you to live the retirement you've always dreamed of.

"Renting after selling up frees up capital, as well as time as people don't need to maintain and clean a large property."

One retiree who has already embraced the downsizing trend is 77-year-old Jean Wray, who sold her North London home to rent an apartment in Seaford, East Sussex.

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Wray said: "We used to own a lovely house but maintaining it was getting harder. We also wanted to free up some money so we could help our son with a deposit for his own place. I now have a worry-free life and if something needs fixing its sorted very quickly which is great.”

Her new home at Homeshore House retirement development has transformed her lifestyle as she loves "being part of the community and helping get those who want to socialise to get out and about".

Research from Savills has shown that downsizing could provide a significant financial boost for retirees. The estate agents found that 1.29 million owner-occupiers aged 65 and over currently live in four-bedroom houses.

By moving to a two-bedroom home, these homeowners could unlock an average of £305,090. This could translate to an extra £1,218 per month over a 20-year retirement period. However, the financial benefits vary significantly by region.

Londoners could boost their monthly income by £2,523 through downsizing. In contrast, those in the north-east would see a more modest increase of £826 per month.

These figures come as Halifax reports UK house prices reached a record high of £298,083 in November, with annual growth accelerating to 4.8 per cent.

For those considering downsizing, there are two main options: buying a smaller property or renting.

Buying a smaller home offers long-term security and the chance to build equity, though it comes with additional costs.

Couch said: "For those considering downsizing, renting in retirement is becoming increasingly popular," particularly in retirement developments.

Most retirement developments offer communal lounges, gardens, lifts, guest suites and an onsite manager. They also typically include a 24-hour care line for emergencies.

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Renting can reduce maintenance responsibilities, as tenants aren't responsible for major repairs. It also offers greater flexibility to move if circumstances change.

However, renters have less control over property modifications and may face less long-term security than homeowners.

While downsizing can unlock significant funds, experts warn it's essential to consider the hidden costs involved.

Those looking to downsize will need to factor in solicitor fees for handling property transactions.

Estate agent fees will also need to be budgeted for when selling a current property.

Moving costs, including hiring removal companies and packing supplies, should be calculated into the overall expense.

For those buying rather than renting, stamp duty may be applicable depending on the property value.

Mortgage holders should check if early repayment charges apply when selling their current home.

Financial advisers recommend thoroughly assessing these costs and consulting professionals before making the decision to downsize.

The key is to ensure the financial benefits of downsizing outweigh the associated expenses for a more secure retirement.