But it is not just the younger generations to which more attention is being paid. The Intermediary Mortgage Lenders Association has focused on so-called last-time buyers, which it defines as homeowners aged 55 or older interested in moving home.
This age group represents “a significant and growing portion of the entire population”; nearly all population growth in the UK over the next 20 to 30 years is expected to be concentrated among this age group. Many are ‘empty nesters’, whose children have grown up and who are looking to move from the family home. However, the report focuses on those looking to move to mainstream housing, rather than those who are moving because they need specialist housing or care.
Key ingredient
While the paper acknowledges that first-time buyers represent “a key ingredient in the smooth running of the housing market”, it makes clear they are not synonymous with the market as a whole. FTBs account for only 30 per cent of total transactions. Statistics concentrating on mortgage-lending activity may be misleading: house-buying among older homeowners is overlooked as most of their moves are cash financed. Chart 1 shows the number of home movers by age group.
Not surprisingly, 63 per cent of older homeowners own their properties outright and account for 84 per cent of all outright owners. They also hold £1.8tn of a total of £2.6tn of housing equity.
As a result, the IMLA says the behaviour of older homeowners has the potential to “profoundly affect the functioning and health of the housing market, both now and for decades to come”. It says that studies suggest older homeowners have a strong interest in moving; 47 per cent say they plan to downsize. They want a home that is easier to manage and has fewer household bills. However, the main inhibitor to movement is a lack of suitable property to which to move. High transaction costs and affordability pressures are also cited as factors.
Golden opportunity
The report says it is “bewildering” that older buyers’ desire for more manageable, energy-efficient and low-maintenance homes has not translated into “a golden opportunity for private sector housebuilders”. It suggests the market has failed and that the government needs to intervene and unblock supply, developing new housing models that cater for mainstream LTBs.
Pointing to the success of government initiatives designed to support new-build activity and FTBs, it suggests that there is a “policy blind spot” when it comes to older homeowners, who it says are experiencing similar pressures to FTBs but with few schemes designed to support them. It also recognises that there may be some “political sensitivity to helping those already deemed fortunate enough to own a home”.
However, the report argues there are wider benefits to be gained – suitable housing is crucial for the health and wellbeing of individuals and impacts on other public spending such as the National Health Service and social care.
It also argues that support for LTBs would underpin greater property turnover and provide benefits for overall market liquidity. But it is sceptical of the suggestion that stamp duty relief for LTBs would help – one of the pillars of a recent House of Lords report.
Ironically, the IMLA argues that such a policy could trigger more concerns about intergenerational unfairness, and while well-intentioned, may have unintended consequences and risks adding further complexity to the system.
The association believes lenders, intermediaries and the government all have a role to play in transforming the situation. It concludes that if a healthy housing market is one where households face a good choice of properties and can move easily between them, the UK fails this test when it comes to older people.
