A lack of suitable smaller homes is stopping potential downsizers from making the move.
Although the housing crisis is widely recognised in relation to younger people trying to get onto the housing ladder, the other side of the market may also have challenges to face.
The shortage of suitable homes has meant that would-be downsizers are stuck in properties which are now beyond their needs.
The older generations are more likely to be asset rich and cash poor, therefore methods such as equity release are required in order to release wealth tied up in a property.
However, whilst borrowing against a property may appear to be a viable option, its costly nature can mean that in reality, it is less so.
It has been estimated that 111,000 homes could be introduced to the market if those put off by the cost of downsizing were to sell.
Another key reason behind potential downsizers being deterred is the lack of alternative homes.
Due to space often being rationed on new build land, developers will tend to construct flats and homes aimed at those looking to get onto the housing ladder. Paul Green of travel and financial services group Saga commented on first time buyers being the prime target for developers, who in turn produce homes that may be unsuitable for downsizers.
“Developers have been focusing on two- or three-bedroom flats with young people in mind.”
“If you’re downsizing from a large house, a small two-bedroom starter home might not have enough space for everything you expect to have around you.
“If the Government can stimulate demand with a stamp duty cut, and developers can build properties that are seen as aspirational, more people will move.”
An exemption of stamp duty for downsizers could cost £460million according to Mr Green. However, the increase of available property would encourage younger generations to move and the tax they pay would offset this sum.
Mr Green also highlighted the need for properties to be seen as “aspirational” or appealing to older buyers. Retirement homes, for example, may commonly be associated with a loss of independence, leading to unpopularity within the target market. This unpopularity of retirement homes is evident in Britain; only 1% of people live in one.
Whilst unsuitability of a property is one obstacle for potential downsizers, a desire to stay in the local area is another. Individuals may have lived their whole life in a particular location and built up a strong network of friends as well as family. They are therefore much more inclined to remain somewhere they are familiar with that is also able to provide a web of support.
Where there is space available, some individuals have considered building on their own land in order to remain in their preferred location as well as freeing up their property. However, strict planning regulations mean this can often not be carried out.
For many looking to downsize, one level properties are often the preferred choice. Currently, however, only one out of 63 new homes are built on a single level, naturally meaning demand is high.
Housing Minister Gavin Barwell recently stated that the housing White Paper may contain reforms aimed to benefit the older generations, including more sheltered accommodation.
Released yesterday (07/01/17), the White Paper entitled “fixing the broken housing market”, did indeed acknowledge the housing crisis that the older generation face. In numerous points, it references the lack of suitable housing available for downsizers and sets out ways in which it aims to tackle the current market. These include:
Point 1.12, where the paper highlights the need to increase transparency in relation to housing requirement identification. It acknowledges the importance of considering the needs of different groups, including the older generation.
Point 3.14, which acknowledges the demand for custom built homes, especially among older people; the White Paper aims to reduce the barriers currently in place.
Point 4.42 addresses the need for older people to be provided with a “better choice of accommodation”. It states that “the Government is introducing a new statutory duty” to be implemented through the “Neighbourhood Planning Bill on the Secretary of State”. This will mean that “guidance for local planning authorities” must be provided “on how their local development documents should meet the housing needs of older and disabled people.” It goes on to state that the government “will explore ways to stimulate the market to deliver new homes for older people.”
Point 4.43 acknowledges the issue of the lack of suitable homes for older people to downsize to. It highlights the barriers such as costs and the moving process itself in addition to the benefits.
Point 4.44 stresses the governmental awareness of the downsizing struggle, stating that it wants “to build on the evidence that already exists to help deliver outcomes that are best for older people.” This is with an aim to “generate a range of ideas for incentives and other innovations” which the government will then consider. These consist of: ” including advice on adaptations; supporting custom build for older people; looking at how community living could work; as well as innovative models of housing with support available.” Whilst allowing people to preserve their independence, the proposal also aims to relieve the pressure on adult social care.
