Over 1.4 million homeowners aged over 65 in the UK will think about downsizing in the next 5 years. However, new research suggests that they are having a great deal of difficulty in finding the right sized property as not enough retirement housing is being built by property developers.
According to the study, it seems those considering downsizing are worried about the financial uncertainty and emotional impact they may experience from moving out of the ‘family’ home.
Across the UK 500,000 people aged over 65 say that they have thought about moving but reconsidered because they felt that they’d be worse off financially and over 620,000 people aged over 65 say that they have thought and even looked into downsizing but haven’t been able to find a suitable home in their area.
In the same group, over 50% were worried about the lack of suitable homes available to them. They were also worried about maintaining their current homes, and another 27% were concerned about the financial implications of needing to maintain their property.
The same study has also shown that nearly 20% felt their current property was too big for them and over 40% were concerned about their bills and the need for repairs and upkeep for their property.
Wider Property Market Implications
Dean Mirfin, the Chief Product Officer at Kew Retirement has said: “Downsizing should make financial sense for older homeowners as it releases money to pay for retirement and it also should make sense for the property market as a whole as it frees up bigger houses.”
He continued by saying: “But despite the numbers of older homeowners wanting to downsize, it is clear they face problems in finding suitable homes for retirement and for many the finances just don’t add up. Unfortunately, that leaves them struggling to maintain homes, and in many cases, struggling financially.”
He further explained: “Pensioners are sitting on property wealth of more than £1 trillion which could significantly improve their standard of living in retirement and helping them make the best use of that money would boost their finances and the economy as a whole.”
Around 725,000 properties in the UK fall into the ‘Retirement Housing’ category. This ranges from assisted living housing to age-restricted developments; however, these account for less than 3% of the total housing stock available, and they are predominantly older, affordable housing properties. Less than 1% of all UK property is private retirement housing.
This lack of suitable homes being built in the retirement housing sector is a missed opportunity on the property developers’ behalf to tap into the needs of an ageing population.
Property Developers and Retirement Housing
The existing planning tax regime, delays in negotiating affordable housing contributions, the lending restrictions imposed by banks and a lack of recognition in local development plans mean property developers are discouraged from building retirement properties.
To encourage property developers, a further study suggests the Government should consider an exemption from planning charges and affordable housing contributions for retirement housing developments. Furthermore, the report also suggests that older people moving to retirement housing should be exempt from paying stamp duty and also be offered a ‘Help to Buy’ style equity loan to enable older people to bridge any gap in funding they may experience by downsizing.
The Gap in the Market
The need for retirement housing has never been more noticeable than now. The UK population is getting older, and the need to free up family homes and help ease the stress on the NHS and the government means that there is a huge gap in the market.
Not only would the development of more retirement housing help the larger community, but these specialist properties can help reduce loneliness, create a safer area for our pensioners and may even help reduce visits to the hospital. If more homes were built with the over 65s in mind, then the all too familiar scenario of accidents on the stairs or injuries at home could be drastically reduced.
There is an increased awareness now of the benefits surrounding retirement housing. An open dialogue, as well as clarity at the planning stage, would potentially mean that retirement housing could be delivered on a larger scale, which would not only address some of the social housing problems but also help ease the burden on social care.
