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A members view: The UK's downsizing boom

Monday 30 October 2017

As Britain prepares for a downsizing boom, Managing Director of Millwood Designer Homes and NAEA Propertymark Fellow, John Elliott, looks at how ‘empty-nesters’ could provide a much-needed boost to the UK housing market.

"It has long been suggested that by encouraging ‘empty nesters’ to move out of larger properties, it will free up a quantity of bigger homes for families and second steppers, and assist in keeping the UK housing market active.

"Figures released from McCarthy and Stone’s Retirement Confidence Index revealed that of the 3000 adults they recently surveyed, 38 per cent of those over 65 would consider downsizing imminently if the circumstances were conducive.

"At present, there are approximately 141,000 units of owner-occupied retirement housing built in the UK, which highlights the obvious need for a much greater supply. And with a predicted 11 million pensioners considering a move to a smaller home by 2036, it has been suggested that the Government will have to prioritise specialist retirement housing and other forms of accommodation for older people, otherwise the country will lack the necessary infrastructure and support services to cope with a demographic shift on such a large scale.

"Clearly there are many benefits in downsizing, not least of which is releasing equity from a previous property, and of course saving time and money on the maintenance cost of a new home vs a second hand or period home.

"The latest data from Savills reports that downsizers accounted for one in five of new home buyers over the last four years, which demonstrates that so called ‘empty nesters’ are taking opportunities where they can to ‘right size’ into a property that better suits their needs - with this dynamic becoming particularly apparent after children have left the family home.

"Compromising on space is a concern that downsizers have but need not necessarily be a problem, and whilst I believe we should encourage older homeowners to downsize in order to free up the larger properties, it should not mean that they will lose out. Apparently nearly 60 per cent of those downsizing bought houses with four or more bedrooms. 

"There is another factor that is affecting this sector of the market, and it is that of stamp duty. It is considered that around 10 per cent of older home owners would be encouraged to move now if some of the penal stamp duty regulations imposed by George Osbourne were to be removed or materially reduced. This could result in a further 1.2 million downsizers leading to much better movement across the market as a whole and providing a huge benefit for first time buyers and second steppers.

"I believe the Government, in its upcoming Autumn Statement, should have serious regard to the levels of stamp duty if it wishes to create a fairer and more fluid housing market."

If you have a view on current issues affecting the housing market that you'd like to submit, please get in touch by sending an email to Stacey Ballard with the subject title 'Member's View'.