The Upside to the Downsize

Lynda Blackwell of the Financial Conduct Authority, the UK’s financial markets regulator, came under fire last week for describing Britain as having a ‘real issue with the last-time buyer’. Media coverage paraphrased her comments as suggesting that older homeowners are ‘housing market blockers’. This evokes the equally unhelpful usage ‘bed-blockers’, to refer to people who in this instance have the audacity to need to stay in hospital – more often than not because they do not have a safe place to be discharged to, or support in place once they get there – and thus ‘take up’ valuable inpatient space which could be used by others. Yes, Britain does have a real issue with older people – it’s how we talk about them.

The fact is that circumstances are currently stacked against older people contemplating a move to a smaller property. Stamp duty and the practical cost of moving are immediate financial disincentives, and then there’s the question of where to move to – chronic underinvestment in retirement housing means that attractive, suitable later life homes are few and far between.

Calls to support downsizing are not a question of an impatient younger generation cajoling and coercing a stubborn older one. Readers need not take Lord Best’s word for this; according to polling conducted for Demos in 2013, more than half of over 60s (58 per cent), said they would be interested in moving. Of these, the majority (57 per cent) wanted to downsize by at least one bedroom – with the figure rising to three in four potential movers (76 per cent) among those currently living in three-, four- and five-bedroom homes. In total, that equates to 33 per cent of over 60s – 4.6 million people nationally – who want to downsize.

That is not, of course, to suggest that all older people in large houses are actively trying to move and finding themselves frustrated at every turn. Many will not even have entertained the idea, and many will have considered and dismissed it. Not all of the things that make downsizing an unattractive or a seldom-entertained proposition could be solved by a simple fix like a dedicated grant or a clause in tax legislation . The fact is that none of us, across all generations, are very good at planning ahead until we have to; we suffer, in other words, from ‘optimism bias’, a tendency to overestimate the likelihood of good outcomes and underestimate the likelihood of bad – as well as a good dose of tendency to procrastination.

To describe older people as ‘the problem’ is to ignore the wider, systemic barriers. Nonetheless, older homeowners’ attitudes do play a part – and it is worth asking what has shaped the widespread preference for staying put. We are prey to an all-pervading narrative that prizes living in a home of one’s own above all else, even at the expense of our physical and financial wellbeing. This affects more than just the housing market – the supremacy of ‘staying in one’s own home’ and ‘dying at home’ means that care in other settings like care homes and hospices – often more appropriate, very often excellent – can be written off as a ‘last resort’.

Clearly, we in the UK are going to have to get used to approaching planning for later life in a different way. At a recent Reform health conference, the Secretary of State Jeremy Hunt suggested that, in future, we should see ‘a blurring of the distinction’ between saving for a pension and saving towards one’s care costs. Property needs to feature in that equation, too. Demos has called for an automatic ‘financial health check’ for everyone reaching state pension age, and the APPG on Housing and Care for Older People (which we supported) recommended a ‘comprehensive advice offer’ that would cover both finances and housing options.

Other short-term measures – a less punitive stamp duty regime, and access to ‘help to buy’ schemes – need to be combined with longer-term, demand-side commitments from the top, such as changing the planning regime to stimulate investment in new retirement homes, and requiring local authorities to consider retirement housing specifically when assessing need in the local housing market.

Whether we’re talking property chain or policy change, movement won’t be secured through lazy, ‘generation wars’ rhetoric. On the contrary, we urgently need to take a broader, less divisive view – acknowledging the wider drivers that can make a downsize unattractive, considering the needs of older potential buyers on a par with first-timers, and including housing options as part and parcel of later life planning.