With two children at university and a third planning on heading there next year, my wife and I find ourselves on the cusp of becoming ‘empty nesters.’
As we look ahead to having three empty bedrooms in our home, we’ll soon be joining the growing number of ‘under-occupiers,’ who are often blamed for holding back the property market by occupying larger, empty homes.
While it’s probably too early for us to start clearing out the kids’ rooms just yet, it does present an interesting dilemma. Like many in our situation, we’ve had the conversation about potentially downsizing, and also like many others I suspect, we find that the decision is more of an emotional than a financial one.
While we might like to believe our houses are just bricks and mortar, they’re often much more than that - they’re the places where children have been raised, and for some, no amount of financial incentive will convince them to leave that behind.
There’s been a lot of talk in the market of late about how some form of stamp duty exemption - particularly for those in later life - might help encourage under-occupiers to downsize.
While the argument for downsizing makes perfect sense on paper, I wonder how many under-occupiers are sitting around thinking they can’t move because of stamp duty costs.
Is right-sizing the right thing?
A recent report from Barclays: ‘Right-sizing Revolution: Unlocking Untapped Capacity in the Housing Market,’ found there are as many as 3.8 million under-occupier households in England and Wales - 36% of which are aged between 45 and 64 years old.
When looking at the barriers to downsizing, the study found that more than six in ten (61%) under-occupiers felt an emotional attachment to their current home due to the memories and effort they’d put into it. Only 20% of those surveyed felt that people should downsize out of a sense of obligation and to free up homes for others.
I’m not surprised by this statistic. While it sounds nice in theory, I doubt many under-occupiers are motivated to pack up their homes simply to help younger families move in.
Along with the stress and complexity of the moving process, another significant barrier identified in the report was a lack of suitable housing to move into and the challenge of finding the right property.
I think there’s sometimes the perception that once you hit a certain age, you automatically want to move into some kind of retirement village. While it would be nice to think it would be like The Thursday Murder Club, I’m not sure it appeals to many people under the age of 80 - and even then, I expect many would still prefer to stay in their own home.
A number of those surveyed however did say that decreased costs could act as an incentive for them to move, such as a home that requires less maintenance and fewer general expenses. While that makes sense, we are then back to the question of where downsizers can move to. Newly built bungalows are slowly becoming extinct, and if they start buying up one-bedroom flats, they run the risk of being accused of blocking first-time Buyers (FTBs) from the market.
Anyone with children who have gone off to university or temporarily moved out knows how rooms may sit empty for months on end, but when everyone is back, they’re very much needed. With the average age of a FTB in the UK around 33, there’s also the possibility that the children might return home for a while before they manage to get onto the property ladder themselves.
At the other end of the generational spectrum, there’s also often the need to care for elderly parents or relatives. The advantage of a bigger house with spare rooms is that it can facilitate this, which is often better than the care home alternative.
The need for more homes
Barclays’ report made a number of key recommendations, including offering incentives such as grants, vouchers, or the ability to offset moving costs against stamp duty for those who downsize. Some suggestions were more general, like forming a working group to make home buying simpler and less stressful, as well as improving the visibility of new housing.
Another notable suggestion was to build more retirement and age-appropriate housing. While this is a good idea and could potentially incorporate modern energy efficiency measures, I do wonder if it might come with its own set of issues. For example, would we take these new homes out of the affordable housing quota or the FTB quota?
While I would like to see a solution to the downsizing issue, I’m not convinced any movement in this market is going to be forthcoming anytime soon.
We recently learned that the government plans to start distributing £68m to local councils to help them develop disused brownfield sites and build Labour’s promised 1.5 million homes over the next five years. The funds will be distributed across 54 local authorities in England and will help deliver 5,200 homes on sites like former industrial land and car parks.
In the immediate future, if we want to get more families and FTBs into homes, I think building more homes and prioritising house building still looks like the best way to do it.
