The government’s long-awaited housing report, which sets out plans to tackle the UK’s housing shortage, fails to consider the issue of retired people looking to downsize, says Now Pensions director of policy Adrian Boulding.
Fixing our broken housing market blames demand outstripping supply for expensive, sparse housing. It says that, since the 1970s, an average of 160,000 new homes have been built each year in England, yet the consensus is that 225,000 to 275,000 are now needed per year to keep up with population growth.
It warns: “The housing shortage isn’t a looming crisis, a distant threat that will become a problem if we fail to act. We’re already living in it.”
To tackle the problem, the government believes it must focus on building the right homes in the right places, that homes must be built quickly and that the market itself must be diversified.
Yet Boulding argued much of the report addressed the issue from the point of view of young people and young, working families, while largely ignoring the additional housing stock coming from retired people downsizing and selling their properties on to the next generation.
“What needs to be built is appropriate homes for the retired community so it’s attractive for them to downsize and release family-size houses to the next generation coming through,” he said.
“It is a particularly important part of the process. We estimate 7.7 million people will retire over the next 10 years – that’s an awful lot of people who can, and want to, downsize their homes.”
Rutherford Wilkinson operations director Trevor Clark took a similar view, saying: “The sheer scale of empty and under-occupied homes in Britain shows there is the capacity for older people to downsize to smaller homes and it’s a positive move that the government is taking steps towards building the right kind of houses in the right places. However, there was a lack of specific measures in the whitepaper to incentivise older people to downsize.”
He added: “The whitepaper did say custom-built houses are to be encouraged and the government noted its support for sheltered, step down and extra care housing, which offers older people more confidence to move into a new home where their needs will be met.
“The largest amount of potentially untapped wealth an older person has is most likely to be stored within their property, an achievement which they have probably spent most of their life procuring. Downsizing can release money that can be spent on care being provided at home rather than moving into residential long-term care, which can be catastrophically expensive.”
Boulding did stress however that people should not be encouraged to rely solely on their home to provide a retirement income, adding this is a very risky strategy.