The UK is facing the prospect of a downsizing exodus, according to McCarthy & Stone’s annual Retirement Confidence Index (RCI).
Developed in conjunction with YouGov, the research shows how 5.7 million people aged 65 and over are considering downsizing or would be encouraged to move with a one-time stamp duty exemption for older people downsizing, with the figure set to increase to more than 11 million in fewer than twenty years (2036).
The first part of McCarthy & Stone’s in-depth study entitled Retirement Housing: Integral to an ageing Britain – an annual study of over 3,000 UK adults aged 65 and over – reveals that 38% of the age group would consider downsizing now, with an additional 10% encouraged to move with a stamp duty exemption, equalling 48% – a rise of 4% from the prior year.
Based on the current population size of those aged 65 or over, this would mean that approximately 5.7 million could potentially start packing their bags, up from 5.4 million last year and highlighting the growing appetite for downsizing among the elderly, if the right type of properties were available. Even without a stamp duty exemption, the number is as high as 4.5 million this year. An additional 1.2 million would therefore be encouraged to move by the incentive, with the housing released acting as a huge benefit for first-time buyers and second-steppers.
This number is only set to increase as the UK’s population ages rapidly. Based on population projections for the age group, the retirement housebuilder highlights the urgent need to focus on the UK’s preparedness for this estimated downsizing exodus.
Assuming a conservative growth of 4% every five years in the number of adults aged 65 and over considering moving and encouraged to move with a stamp duty exemption, figures for elderly movers is set to almost double: 11.1 million are estimated to want to move in 2036 based on current population projections by the Office for National Statistics (ONS). This level of demand far outstrips the c.141,000 units of owner-occupied retirement housing built in the UK to date.
Clive Fenton, Chief Executive Officer at McCarthy & Stone, said, “The rise in the number of those who want to downsize is an inevitable consequence of the UK’s rapidly ageing population. Within the next twenty years, those aged 65 and over are expected to grow by almost 50%, which will expose the UK’s grossly inadequate level of suitable housing for older people if we maintain the current status quo.
“With over 11 million people considering moving to a more suitable property by 2036, 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.
“The government must build on the positive wording in the Housing White Paper and consider how it can influence market supply. The government’s Help-to-Buy scheme and other initiatives aimed at first time buyers have spurred market supply of homes at that end of the spectrum but has done nothing to help the housing choices of those in later life. We really need a strong planning policy presumption in favour of retirement housing and other forms of suitable housing for our ageing population.”
The research also highlights how enabling people to downsize would help unlock the UK’s housing chain and release a significant level of UK housing stock, according to the retirement housebuilder.
According to calculations, downsizers moving now would help unlock 2.8 million bedrooms across the UK.
In addition, adults aged 65 and over have c. £1.5 trillion of housing wealth. Taking the rate of 48% of adults aged 65 and over who are looking to downsize or would consider it with a stamp duty exemption, were the homeowners among them to proceed this would release homes with a combined value of some £720 billion, which could be purchased by families and first time buyers.
Fenton said, “Despite the warning signs, the UK’s housing stock is woefully unprepared for the demographic shift to an ageing population, which has created a new ‘Generation Stuck’ dilemma. While desiring to move, as our study clearly shows, those in later life are discouraged by the lack of suitable housing and the cost.
“A stamp duty exemption would make the process more attractive, and the figures show that over a million more older people would be encouraged to move as a result. 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.”
According to the findings, respondents expect to release approximately £80,000 (£79,318) of equity on average when they downsize. If all 5.7 million adults aged 65 and over who currently express a desire to move proceed with it, this would mean that c. £450 billion of equity would be released to help with retirement costs or to spend as they please.
Assuming the average amount of equity released remains constant and in light of the downsizing moves noted above, this would mean that in 2036, if the 11.1 million adults aged 65 and over who consider moving or are encouraged to do so actually moved, this would help release £877 billion of equity.
Clive Fenton addsed, “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.”