The prize for this year’s least tastefully titled research report must go to Legal & General’s Last Time Buyers, a survey into old folks’ housing stock.
A major cause of the housing crisis, it warns, is OAPs - or ‘LTBs’ - “under-occupying” homes. The report’s tone of urgency is underscored by the pension provider’s corporate strapline, ‘Every Day Matters’ on the cover.
While the title might seem a tad crass, the urgency is probably warranted. The research, undertaken with the Centre for Economics and Business Research, attempts to quantify the huge ‘pinch point’ at the top of the housing ladder that is preventing first-time buyers (FTBs) getting on the first rung.
The stats make eye-opening reading: there are 5.3 million under-occupied homes; 3.3 million LTBs want to downsize; the total equates to 7.7 million spare bedrooms; and all this tots up to £820bn of accumulated housing wealth, reaching £1.2 trillion by the end of the decade. The average holder of all this accumulated wealth lives in a four-bed house, but really wants a two-bed property.
Unfortunately, they are not making the move, it seems. Almost a third of older homeowners have considered downsizing in the past five years; only 7% actually have. This equivalent of the health service’s ‘bed blocking’ is contributing to the housing market’s lack of churn.
The report focuses on the potential for unlocking stock and the view that there would be a commensurate improvement in supply for FTBs. I think there’s a wider problem along the intervening chain. Almost every bit of commentary on the UK housing market has focused on the assumption we’re not building enough homes. True, we’re not, but an equally big problem is we’re not moving enough.
The price of the average house in East Cheam is not going up as fast as it is because not enough homes are being built in East Acton, but because new properties coming onto the market are such a rarity, especially in catchment areas of decent state schools.
Were more equivalents of East Cheam’s most famous (fictional) resident, Tony Hancock, to move out in numbers there would be more choice in mid-market detached homes (which accounted for 46% of those surveyed, with a further 36% in semis) and less pressure on prices.
For the past three years or so, the coalition government tinkered with approaches to encouraging this process. (Ironically, in an example of unjoined-up government, the DCLG slipped out a policy paper on 7 May covering housing for older people, including an appendix on “helping older and disabled people live at home for longer”). L&G suggests a 10-point plan for wooing residents out of their homes into more suitable smaller units. These include: smaller units near friends and family; better options for equity release; and tax incentives. This last point is probably the biggest elephant in the room and the one that would most divide pro-housing politicians and Treasury ministers. Despite the sensible move away from ‘slab’-based levies to a progressive system, the fact remains that stamp duty is an expensive impediment to moving. Even equity-rich oldies baulk at forking out: 21% said it had put them off moving.
Even if tax incentives were available, a quarter of people surveyed cited a lack of suitable properties to move into being an obstacle to vacating. Local authorities should set targets for retirement housing, rather than the patchwork quilt of approaches employed across the country.
One word that - mystifyingly - does not appear in the L&G report (nor possibly in UK planning policy) is ‘bungalow’. In 2013, they made up only 2% of new builds. Housing minister Brandon Lewis has made encouraging noises, but he will struggle to persuade housebuilders and planners to build more. To benefit LTBs (and the rest of us) he might have to lean a bit harder. And cut stamp duty.
Alastair Stewart is building and property analyst at Progressive Equity Research