More than half of Brits living in homes too big for them. We need incentives for over-65s to downsize, not punitive property taxes, writes Nick Sanderson
Yesterday, Nationwide released data revealing the number of homes with two or more spare bedrooms has climbed to 53 per cent, up from 44 per cent in 2005.
When thinking about these numbers, it would be remiss of us all to ignore the seismic shift in how we use our homes, especially in the last five years. Remote work has turned spare bedrooms into home offices, but even with this considered, a substantial portion of the UK’s housing stock is still under-occupied.
More property taxes will give little incentive for older homeowners to downsize
The International Longevity Centre delved into this issue in 2023, looking particularly at older homeowners. Nearly nine in ten people aged 65-79 livema in under-occupied housing, and over half have two or more excess bedrooms. When you consider that only 11 per cent of property purchases in England involve buyers aged 65 and over, the lack of movement at the top of the ladder is stark and has a clear domino effect down the ladder.
It isn’t just an inefficient use of space; it points towards a wider systemic issue in our housing market. Older homeowners aren’t moving out of large family homes, which are often unsuitable to their changing needs, and the reasons why are numerous. It’s expensive, there is little incentive to do so, choice is limited and moving out of what might have been the family home for the last few decades comes with real emotional upheaval. pens
But I fear this part of the housing stock challenge is a headache that policymakers are ignoring, instead focusing on trying to just build more. A somewhat blinkered approach and one that could be compounded by the rumours that we have heard in the last few days about a blanket property tax on homes over £500,000 paid at the point of sale.
Any tax reforms that could deter sellers – and importantly downsizers – and put the brakes on the housing market should be avoided. What the market desperately needs is movement. Movement that frees up large family homes and releases some of the £2.89 trillion in property wealth that over-65s hold, and gets people living in properties that match their needs.
How to get the housing market moving
The fix is two-fold.
First, we must create desirable and attractive places for people to live and that they genuinely want to downsize to.
We can’t expect everyone to opt for retirement village living, but we do need to provide a greater range of high-quality options from modern well-designed flats, apartments and cottages to vibrant retirement living communities.
The UK currently builds only 7,000 later-living homes each year, but to meet growing demand and truly unblock the housing system, delivery needs to scale to between 30,000 and 50,000 annually. Planning reforms and a mandate on the provision of age-specific properties, as part of new developments, will help this.
Secondly, we need incentives that encourage moving, rather than penalising it. As the government tests the water on policies ahead of the Autumn Budget, policymakers must think beyond blunt tax instruments. We need a system that supports downsizers with targeted reliefs, especially for those moving into specialist retirement living communities.
Addressing both the supply of suitable homes and the financial incentives to move would mark the start of a new chapter for the UK housing market. One which gets people living in homes that align with their needs, and the benefits would be great.
Nick Sanderson is CEO and founder of Audley Group