The UK’s ‘last-time buyer’ market owns 7.7m spare bedrooms and a total of £820bn of housing wealth, according to new research which suggested unlocking this may be the key to solving the housing crisis.
Legal and General and the Centre for Economics and Business Research have quantified the size and shape of this market for those aged over 55, identifying 5.3m under-occupied homes with 3.3m individuals looking to downsize.
The analysis found that the typical last time buyer lives in a four-bed house, but wants a two-bed property. It also showed that 31 per cent are still living in the first property they ever bought.
Almost a third of older homeowners considered downsizing in the last five years, but only 7 per cent actually did. A majority (58 per cent) put it off until after 70, while a quarter did until they were 80 or older.
Stephen Smith, director of housing at L&G and of their Mortgage Club, commented that these figures could be key to solving the housing crisis.
“Government policy is focused on schemes to build more homes for first-time buyers and to help people get onto the property ladder,” he said, noting that initiatives like Help to Buy are part of the solution.
“However, at present, the LTB market is being hugely overlooked and as our figures show it could help to solve the UK housing crisis.”
Mr Smith suggested that more needs to be done to make it easier for older people to consider moving by relieving the burden of stamp duty, creating better options for equity release and providing real housing alternatives for older people.
“If we are able to get that right we will help older people in the UK move to homes which better fit their lifestyles and their needs and at the same time unlock large swathes of valuable housing stock for growing families.”
It is also thought that downsizing will be one way for people to unlock wealth for retirement. Recently published research by equity release adviser Bower Retirement Services found that the median private pension wealth held by over-75s is £43,200, compared with £108,400 for retired people aged between 65 and 74.
The figures showed average private pension wealth peaks at £135,900 in the run-up to retirement, when savers are aged between 55 and 64, but then gradually declines in the early years of retirement and then more rapidly as savers become older.
Andrea Rozario, chief corporate officer at the firm, pointed out that the pension freedoms bring increased flexibility, with savers able to control their own money, but running the risk of leaving themselves without enough when they might need it for care or home adaptations.
“Property wealth can play a major role in helping people to fund retirement and can be accessed tax-free in a variety of ways including downsizing. Advice is critical as lots of options with both pros and cons need careful consideration.”
peter.walker@ft.com
