24 Mar Retirement property crisis looms for the over 65’s
Insufficient homes for two million over-65s who want to downsize
Almost 2m Brits face a housing crisis ahead of old age, with just 186,000 retirement properties available to buy in England and Wales. Research by specialist retirement homes builder Inspired Villages found there are around 720,000 homes across various retirement housing types in total – enough to house just 7% of the older population. The report highlights that part of the issue is that developers are building the wrong type of housing – with the majority of new retirement homes only available to rent.
A lack of suitable homes for downsizing is preventing a large number of home owners in the UK from moving to a smaller property, it is claimed.
Some 33% of home owners aged 55 and over are considering or expect to consider downsizing, but a lack of suitable options is preventing them from moving, a new report says.
A new YouGov survey for the report found 29% who have already downsized or are considering or expecting to consider downsizing did or expect to release in excess of £100,000 in equity, with the most prevalent way of using the money being to put it in a savings account.
The report, Generation Stuck: Exploring the Reality of Downsizing in Later Life, has been written by the International Longevity Centre UK and commissioned by retirement house builder McCarthy & Stone.
The report suggests that a ‘Generation Stuck’ dilemma is being created by a substantial number of older people who want to move and downsize, but can’t due to a lack of choice in the market place.
A chronic under supply of suitable properties for later life, including purpose-built retirement housing, means the UK is running out of homes for its ageing population, leaving them stuck in under occupied properties unsuited to their needs.
According to previous research findings some 52% of all people who classify as under occupiers in the UK are aged 55 and over and at current market trends, it would take 20 years for housing supply, at its current rate, to meet the demand of just half of people aged 60 and over interested in downsizing.
As part of the report, a new YouGov survey found 48% of the 1,252 home owners surveyed would consider downsizing or have already moved to a more suitable property, making this an area worthy of much greater policy consideration by Government.
Of those who have already downsized or are at least considering downsizing some 56% wanted to do so to spend less on property maintenance, 43% wanted to reduce their bills and 43% wanted to move as their children had left home.
The finding that almost three in 10 home owners aged 55 or over expect to release more than £100,000 in equity from downsizing is reinforced by McCarthy & Stone’s figures which show its home owners released an average of almost £60,000 in equity when downsizing to a retirement apartment, with 19% releasing more than £100,000.
The report also details how these home owners used, or plan to use, such equity. Some 35% wanted to put it into a savings account, 30% to enhance their day to day life, and 19% to give it to family members. Of those aged 55 to 59 34% wanted to put it towards a pension.
‘Housing and planning policy should not just be about starter homes. Millions of older people want to downsize to more suitable housing but there is currently little incentive or choice for them to move. As a result, housing chains are blocked at the top of the ladder,’ said Clive Fenton, chief executive officer of McCarthy & Stone.
‘This report is calling for more attention on the housing needs of older people, particularly as 60% of all household growth over the next 20 years will be by those in later life. Billions of pounds of housing for families and younger people could be freed up via policies that encourage a wider range of housing options and also incentives to move, such as a stamp duty exemption for those moving to a smaller property. This is an area which demands greater policy focus by government in 2016,’ he added.
While the demand for downsizing options is substantial, the report found there is still work to be done with raising awareness around the merits of downsizing, from releasing equity to improving physical wellbeing.
Some 44% of those asked in the YouGov survey who don’t plan to downsize do not see the benefit to downsizing, financial or otherwise, with 49% reasoning they can still manage the necessary housework, maintenance, and/or bills.
Respondents aged 75 plus also cited not wanting to leave friends and neighbours, disruption and sentimentality as barriers to downsizing at 43%, 40% and 39% respectively, demonstrating variation in the age groups.
Brian Beach, research fellow and author of the report, believes that the debate around downsizing should focus on the opportunities for people to align their living situation with a property that best suits their needs and aspirations.
‘In this way, perhaps thinking about rightsizing is better than downsizing. Either way, examining the evidence leads us to find that downsizing is an important option for nearly half of older households in the UK. We need to provide opportunities for downsizing rather than stoking up an intergenerational conflict which sees no progress in building or freeing up housing,’ he said.
‘This report has identified substantial demand among older homeowners to consider rightsizing, which could have a significant impact on addressing the UK’s housing shortage. But it is clear that there remains an inadequate supply of the kinds of properties that would serve older households. Without suitable properties into which older people can move and downsize, the potential for increasing the trend in this area is unrealistic,’ he explained.
Changes called for in the report include greater efforts to stimulate the supply of options for downsizing and moving in later life. For example, retirement housing could be given a classification to confer it enhanced planning status and give it exemption from a range of planning restraints.
Land value could be reconsidered to recognise the social benefit of retirement housing, making such properties more affordable and helping developers expand into areas that would otherwise be unviable due to lower levels of equity in the local population.
It also suggests that the downsizing process could be made more affordable by exempting older households from stamp duty when they downsize. This could encourage more people to move, while the overall effect on the housing market would mean the Treasury would not be at a loss. Other measures could include offering financial support for the costs associated with moving or revising the Help to Buy scheme to include later life buyers who face an affordability gap.
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