Manifesto Project: housing the crumblies
Quite obviously immigration needs fixing if we’re going to get a handle on the housing problem. But we also need to get serious about building fit-for-purpose homes and freeing up decent family homes. Part of the problem is that Britain has an ageing population and an inadequate supply of older people’s housing
According to the Home Builders Federation Manifesto (which I have raided extensively), the number of older people living in the UK is increasing rapidly. The results of the 2021 Census found that over 11 million people – 18.6% of the total population – were aged 65 years or older, compared with 16.4% at the time of the previous census in 2011.
In ten years’ time, this figure is expected to have increased to 13 million or 22% of the population, and by 2032 there will be five million people over 80 living in the UK. However, as the number of older people in the UK increases, the availability of homes specifically designed for later living is failing to keep pace. 90% of projected household growth in the coming decades is set to be amongst those aged 65 and over, taking the total number of homes owned by those aged 65 and over from 3.9 million today to at least five million by 2030.
Research from the Homes for Later Living Group suggests that approximately 25% of the country’s 65+ population (nearly 3 million people) want to downsize. This is close to 1 million owner-occupier households. The average person under 65 moves every 12.5 years, but the equivalent figure for over 65s is 33 years because of the barriers to moving, demonstrating the need to give older people more opportunity to downsize should they wish to. These barriers include practical difficulties with moving house (due to age or illness), financial difficulties – both the cost of moving house and the cost of properties – and a lack of available, suitable homes.
The analysis also finds:
Each person living in a home for later living enjoys a reduced risk of health challenges, contributing to fiscal savings to the NHS and social care services of approximately £3,500 per year.
Building 30,000 more retirement housing dwellings every year for the next 10 years would generate fiscal savings across the NHS and social services of £2.1bn per year.
On a selection of national wellbeing criteria such as happiness and life satisfaction, an average person aged 80 feels as good as someone 10 years younger after moving from mainstream housing to housing specially designed for later living.
Helping more people who wish to downsize would not only support their independent living and generate significant savings for the NHS but would also help younger families looking for a family-sized home in prime locations (such as near schools) and thus release homes suitable for first-time buyers on to the market. Research finds:
Roughly two in every three retirement properties built releases a home suitable for a first-time buyer.
If all the home owners over the age of 65 in England who wanted to move were able to do so, they would directly release one million properties back onto the market and free up two million spare bedrooms.
Every ‘Homes for Later Living’ property sold generates two moves further down the housing chain, and in certain circumstances this may be more. This frees up homes at differing stages of the housing ladder for different demographics. A typical Homes for Later Living development which consists of 40 apartments therefore results in 80 additional moves further down the chain.
Overall, the lack of positive planning for older people’s housing and the limited consideration of its commercial and viability challenges is a major reason for the current under supply of such housing.
To resolve these challenges, every Local Planning Authority (LPA) should be required to:
Assess the demand for all forms and tenures of housing for older people and to include policies and a strategy, including land supply, for meeting this demand in its local plan. This is an essential requirement to ensure positive planning for the delivery of housing for older people.
Every Local Planning Authority should indicate in its local plan areas where proposals for the development of housing for older people would be welcomed. This step would provide more confidence for developers in seeking to bring forward new schemes for older people’s housing.
We should also consider the introduction of other measures, including:
Production of a standard methodology to determine how many homes for older persons are required to adequately meet demand each year.
On the demand side, Stamp Duty relief for those of pension age who are downsizing would support affordability for those wishing to move and provide a wider market signal for innovation, encouraging new market entry. Overall, this would clearly enhance consumer benefit and, according to a number of studies, would also have a positive fiscal impact for the Government due to the additional moves down the housing chain and related economic activity that additional older movers would generate.
This, I think, is an important step. When people choose their family home, they tend to assess access to schools, proximity to transport networks, and access to jobs. But these considerations become less relevant in later life, meaning that useful housing stock is under-occupied, causing younger families to have to commute further and travel further for school runs.
It leads to pensioners staying in wholly unsuitable properties which they are unable to maintain, and become unsuitable when they face later life health complications. Larger homes are also much more expensive to run.
It was once the norm for people to downsize, but that’s something that happens less than it should simply because there‘s insufficient supply of suitable homes. Focussed policy in this area has no down sides.
I completely agree with this article, and also with David's comments below on Government interference breaking a functioning market. Stamp duty in particular now provides a massive distortionary effect on the housing market, and indeed on the jobs market as well. Reducing stamp duty on housing to merely cover the costs of the registration would, I believe work wonders. If we combined that with higher council tax (e.g. a flat rate % on the value of the house) to nudge people into right-sizing their housing (and fill the fiscal gap) that would also be effective and the demand would drive the supply of appropriate homes. (While we're at it, could be also cut stamp duty on UK shares so there is not the disincentive to investing in the UK compared to other jurisdictions)
Most towns in the South East have several new developments of retirement housing, usually expensive flats in a central location - which makes sense commercially. The problem is that not every oldie wants to move from a loved and spacious old family home with garden to a town centre appartment. There doesn't seem to be much in between - although there is a demand for this. Stamp duty and moving costs are also a major deterrent - it's shame as we see building more and more houses as the only solution, when we could make a great deal more of our existing stock. If stamp duty were halved, the extra transactions that would follow would more than cover the cost - and add more to the economy in other areas.