10 Jul 2015
Together, let's help to put downsizing on the national agenda
McCarthy & Stone, the UK's leading retirement housebuilder, agree with us that there needs to be more focus on elderly homeowners.
CEO of McCarthy & Stone
Clive Fenton is CEO of McCarthy & Stone, the UK’s leading retirement housebuilder. The Group buys land and then builds, sells and manages high-quality retirement developments. The Group has sold c. 50,000 homes across more than 1,000 developments since 1977.
The housing crisis is one of the most pressing issues we are facing. According to estimates, the UK will have to build around 250,000 new homes a year to keep pace with demand, which far outweighs the current annual rate of 141,000 new houses. As the country searches for a solution, we strongly echo Legal & General's call for more focus on elderly homeowners as a crucial piece in this supply puzzle.
As Legal & General's report Last time buyers (PDF, 1.12 MB) illustrates, there is a significant number of this demographic who are looking to move to either a smaller or more manageable residence that is more suitable to their needs. This process of downsizing has significant potential to release much-needed stock further down the housing ladder. Indeed, our own research with the think tank Demos shows that over-60s in the UK who are interested in downsizing are currently sitting on hundreds of billions of pounds of housing wealth, much of which is tied up in larger homes that could be occupied by families.
It is quite telling that almost six out of ten over-60s in the UK are interested in downsizing but feel restricted by the lack of suitable housing. This is central to this issue - there are inadequate structures in place to encourage elderly homeowners to move house.
There is just not enough appropriate housing to cater to the specific needs and aspirations of elderly residents. At the moment, there are around 110,000 units of owner-occupied specialist housing for older homeowners. In addition, elderly residents are not incentivised sufficiently to move house, especially given all of the personal costs to them of taking such a significant step in later life.
During the run-up to the election, we spoke with each of the three largest political parties about how the government can improve the process of downsizing. In our conversations, we highlighted the value of downsizing not just in freeing up housing equity but also in providing wider social benefits.
For example, elderly residents moving to owner-occupied retirement housing can enjoy an enhanced level of care, companionship and security, which reduces the need for external support. Because our homeowners spend fewer nights in hospital, this helps alleviate pressure on the NHS. The Institute of Public Care estimates that each specialist Assisted Living (Extra Care) development brings cost savings to adult social care budgets of around £1m a year.
Reforming planning regulations to proactively encourage this form of housing would increase choice for older people, and a stamp duty exemption would help address the significant costs of moving in later life, which can be a major deterrent. Policy measures like those suggested in the Legal & General report are required if the country is to meet the rising demand for retirement housing and realise the many benefits that this form of housing can deliver.