Downsizers could release 2.8 million bedrooms if a stamp duty exemption is promised
PUBLISHED: 15:55 04 August 2017 | UPDATED: 16:05 04 August 2017
Silver economy could provide £877 billion of equity by 2036 for first time buy homes
Just under half of all pensioners aged 65 or over are considering downsizing, potentially freeing up homes valued at £720 billion for first time buyers and second steppers. The McCarthy and Stone Retirement Confidence Index (RCI) produced in conjunction with YouGov studied over 3000 pensioners and revealed that there was a growing appetite for downsizing as the population ages.
38 per cent of those surveyed would consider moving to a smaller property now, with an extra one in ten, or 1.2 million, encouraged by the idea of a stamp duty exemption, up 4 per cent since last year’s tax changes were introduced. Overall, 48 per cent of pensioners, or 5.7 million, are thinking of downsizing. This figure is expected to rise to over 11 million by 2036.
The over 65s currently have a combined housing wealth of over £1.5 trillion. Since respondents on average expect to release £80,000 when they downsize, £877 billion of equity would be released by 2036 according to these figures.
Clive Fenton, CEO of McCarthy and Stone said: “The ability to release equity from the value of homes in later life provides a strong economic argument for downsizing. As the strain on the social care system rises, we will also find more and more people tapping into their housing wealth to cover the costs of retirement and care.”
"“Encouraging moves at the top end of the housing chain will stimulate activity, release millions of under-occupied family-sized homes onto local markets, and help younger people move up the ladder. It’s a win-win.”"
The RCI demonstrates growing demand for more retirement housing stock, at the same time as releasing 2.8 million bedrooms worth £720 billion across the UK for younger buyers.
“Encouraging moves at the top end of the housing chain will stimulate activity, release millions of under-occupied family-sized homes onto local markets, and help younger people move up the ladder. It’s a win-win,” said Mr Fenton.
There are currently 141,000 units of owner-occupied retirement housing in the UK. One of these is Pegasus Life’s Hampstead Green Place, due to be completed in June next year, exclusively for the over 55s. They also have another in the pipeline on Fitzjohn’s Avenue. Simon Deen, director of new homes at Aston Chase believes that downsizers aren’t necessarily looking for something smaller, rather are looking for different amenities. He said: “I don’t think it’s about giving up size, it’s about a change of living accommodation, so if you’re in a house of at least two floors – in St John’s Wood, it can be four or five floors – and you’re switching that for a lateral space, obviously that’s got better appeal.”
In addition to the ease of lateral living, there’s the appeal of up to date amenities at your fingertips. “In Buxmead, the apartments are mostly lateral, the services are second to none, you’ve got a 24 hour concierge, communal gardens, and someone else is dealing with all of the maintenance that would normally come with owning a large house in the area.”
"“The only fly in the ointment is because stamp duty is so high, a lot of people are staying where they are. It’s hampered the downsizer market a little bit. Because whoever’s buying your house is having to pay big stamp duty, and in your onwards move the stamp duty is again not inconsiderable.”"
Prices at Buxmead on the Bishops Avenue start at £6,500,000. Residents can make use of a pool and gym on site, and that’s not only good for downsizers. “The amenities it offers are perfect for grandchildren: swimming pools, cinemas etc,” said Mr Deen.
Developer Harrison Varma designed Buxmead with local empty nesters in mind, with communal entertaining and conference facilities all on one floor and all apartments can be customised for wheelchairs. Other popular downsizer locations include Chiltern Place in Marylebone with underground parking and a concierge service. However, being more central has its downsides.
“Grandparents want to be near their grandchildren. Which is another reason why Buxmead works. A lot of these people’s grandchildren are living in Hampstead Garden Suburb. If you’re at Buxmead you’re close to them, whereas if you’re in town you’re further away and you’d have to pay congestion charge,” said Mr Deen.
There’s also The Park Crescent, where just one penthouse is remaining at £6,750,000. A refurbished property, the flats proved less popular with downsizers largely due to the absence of underground parking and amenities in newer developments, Mr Deen said.
Noting that Help-to-Buy had helped buyers at the first rung of the housing ladder, Mr Fenton added: “We really need a strong planning policy presumption in favour of retirement housing and other forms of suitable housing for our ageing population.”
That stamp duty has had a negative impact on downsizer activity is undeniable.
“The only fly in the ointment is because stamp duty is so high, a lot of people are staying where they are. It’s hampered the downsizer market a little bit. Because whoever’s buying your house is having to pay big stamp duty, and in your onwards move the stamp duty is again not inconsiderable,” said Mr Deen.
“The Government needs to put specialist retirement housing and other forms of accommodation for older people higher up the agenda or we will simply lack the necessary infrastructure and support services, particularly from a health and social care perspective, to deal with such a huge demographic shift,” concluded Mr Fenton.