The upsides of downsizing for the housing market
Incentivising downsizing may provide benefits for young and old generations alike. However, says Phil Harris, director at BLP Insurance, much needs to be done to provide suitable housing options for people in their later years to overcome reservations about making the move
Like many western countries, the UK has an ageing population coupled with a housing crisis, rendering the hope for many young people setting foot on the housing ladder a mere pipe dream.
Incentivising downsizing may provide an inter-generational, and mutually beneficial, solution that can help free up housing supply for great swathes of younger people. However, much needs to be done, such as providing a more adequate stock of suitable housing for people in their later years, to address the very real reservations held by many over the decision to downsize.
Nationwide, there are approximately 3.4m households occupied by those aged 65 or over who are potential downsizers. Over 2.3 million of these households currently have two or more spare bedrooms, meaning the market and the necessity is clearly present. Despite this, recent research from BLP Insurance revealed that two thirds (66%) of people aged 60 or over have never considered downsizing their property.
The main drawbacks identified to downsizing were the upheaval or stress of moving and reduced living space, while loss of familiarity, such as reliable neighbours, and the sentimental impact of leaving the family home also ranked highly. Geography was also shown to play a part, with those 60 or over from the West Midlands and London most resistant to the idea of downsizing, while respondents from Yorkshire and Humberside and the North East were the most open to such a shift in their living arrangements.
Clearly, downsizing is an emotional decision for many people. They or their family may have lived in the home for decades or even generations, building up attachment to the property and accumulating significant memories associated with it down the years. Nonetheless, there are practical reasons and obvious benefits to downsizing.
Unsurprisingly, the top two motivating factors for downsizing among people aged 60 or over identified in the survey were related to property size; the burden of maintaining a larger house and garden and that their current property is too large for their needs. Other factors included a reduction of day-to-day living expenses, and the death of a spouse or partner.
Moving to a more manageable property size can allow older people to reassert autonomy over their lives and make it easier to maintain independent living. Also, opting for a less expensive property can open up many choices to last time buyers, giving them more control over where and how they live, while reducing their outgoing expenses on overheads such as utility bills and council tax.
Another downsizing option that people in their later years may face is moving to a retirement village or development, but at present many see this as a last resort. For instance, only 1% of over 50s in the UK live in retirement developments. This compares to 17% and 13% respectively in the US and Australia. In the UK, a stigma still exists around retirement developments. Our survey shows that the main concerns for people lies in financial perceptions. Nearly half (46%) worry about the cost and a further 44% expressed reservations about hidden fees, while a quarter (25%) saw complex contracts as a major pain point.
It is evident that we need to build collective trust in a system that looks after older people’s property and living interests as they enter the twilight of their lives. The housing industry and the government need to work closely to supply suitable homes and to make the process of downsizing as seamless, stress-free and transparent as possible. Only then can we hope to incentivise older people living in large, former family homes to downsize to the benefit of all.
We are in the midst of a much-publicised housing crisis and require solutions to meet the property needs of people of all ages. Constructing an adequate stock of purpose-built homes for last time buyers is the first step. This will free up housing stock for first- and second-time buyers, provide extra financial reassurance to those downsizing, while injecting much needed impetus into the whole market.