Age concerns

The government is considering ways to encourage pensioners to downsize from larger family homes as a way to ease pressure in the housing market.

That is according to the Daily Telegraph, which reported that the soon-to-be-published Housing White Paper will contain plans to incentivise older home owners – through support with moving costs and reductions in Stamp Duty, to sell up and move to homes that better suit their needs.

The thinking behind the plan is that moving older people into smaller homes would make better use of the existing stock.

The media response seems to have been quite muted and quite mixed. Some see value in improving the efficiency of the stock; others are scoffing at the idea of blaming pensioners for the housing crisis.

But the principal behind such a policy initiative deserves serious consideration and should be of considerable interest to architects in particular.

Here I should declare an interest in the argument, not a financial one, but an intellectual one. I have sought to raise this topic of debate for many years.

Such a policy, if well defined, well targeted and well delivered, might generate social and financial benefits that run far beyond the housing crisis as it is widely described.

These benefits could include more family homes for younger households, reduced burdens on the NHS, lower fuel bills for the elderly, higher overall energy efficiency, a better distribution of the housing stock, older people better located near the services they need, more sustainable communities and, importantly, more homes built.

This list may appear hugely impressive and unfeasibly ambitious. But it is technically possible.

Critically, the driving aim should not be to generationally cleanse’ areas of high housing demand among young people to suit political expediency. It should be to improve the allocation of housing in a balanced way to better suit everyone’s needs, while in the process seeking to unleash the raft of potential benefits that might be opened up.

As things stand there is a growing number of large homes under-occupied by older people. These are not necessarily ideal homes for those who may be frail or isolated. Homeowners that are 65 or older now account for more than 34% of households in homeownership. In 1984 the proportion of households older than 65 was 22%. There was a gentle rise to the end of the 20th century, remaining below a quarter. But, as Chart 1 shows, this proportion has risen rapidly in recent years.

Today more than half of homeowners are in the age group targeted as ‘downsizers’. With both an ageing population and younger households less able to move into homeownership over recent years, this upward trend proportion of older homeowners is likely to continue.

In itself the level of homeownership among older households is not an issue. There are plenty of arguments for high levels of ownership among these households. However the statistics show those at or nearing retirement age move far less frequently than younger households. This is an issue. 

The reason for not moving is not simply down to an eagerness to stay put, as is often argued. Research undertaken for Legal & General in its 2015 report Free up housing stock found: ‘Almost a third of older homeowners considered downsizing in the last five years; only 7% actually did.’

This echoes other research, including that presented in a paper I co-wrote with Birgitta Rabe of the Institute for Social & Economic Research for the Home Builders Federation/NHBC 2012 annual Housing Market Intelligence report using Understanding Society data. It found that 21% of those older than 65 wished to move but just over 5% of those managed to do so within a year.

The central point is that while older households may be less inclined to move than younger ones, those who do want to are more frustrated in that desire.

Increasing movement in the housing market for older households would not simply benefit them, or those who move into the homes they leave. Raising transaction in the housing market appears to be highly correlated with private house building. Broadly speaking, for every 10 homes sold in the private sector, one new private home is built. The reasons for this are uncertain. But it is a relationship that has held pretty stable since forming about 40 years ago, as Chart 2 shows.

With an increasing share of owner occupied homes in the hands of older people, we should expect to see turnover in the private housing stock fall, probably sharply, in coming years. Homeowners younger than 65 appear to be three to four times more likely to have moved into their current home within the past year than those that are 65 and older.

This points to a significant difference in mobility and points to falling numbers of residential transactions and in turn fewer new homes built – assuming the 1 in 10 relationship broadly continues to hold and other things remain broadly equal.

This provides a good justification for encouraging older homeowners to move to more suitable housing. But there are potential health benefits too.

According to the English Housing Survey, many older people live in older homes. These tend to be less energy efficient and more expensive to heat adequately and, despite great strides taken to raise the standard of the existing housing stock in recent years, are also more likely to be below decent home standard. At best this means that many pensioners face the tough choice of spending more on heating or accepting lower temperatures, while being more prone to suffer from ailments related to non-decent housing.

Leaving aside the distress this might cause, work by the BRE suggests that poor housing conditions cost the NHS £2.5 billion a year. Most of this cost relates to older homes which are recorded as being more susceptible to mould and damp and less easy to heat.

Giving older people incentives to move to homes that are warmer, less hazardous and better designed to their needs, seems to make sense given the increasing burdens on the health service, which in large part is down to an ageing population. More suitably-designed and thought-through housing should help to improve the dignity and quality of life for older people while, over time, reducing pressure on the resources available to support them.

Looked at from a construction perspective, commercially, the apparent desire for older people to move and for the government to provide incentives, the signs are that a major market opportunity is opening up. This view is further reinforced when considered next to the housing equity collectively held by older homeowners. Legal & General put this at £820 billion rising to £1.2 trillion by 2020. Whatever the true figure, it is very large.

For architects, as we suggested in an earlier article, there is a critical role to play in designing homes that are highly desirable places for older people to live.

If we can get this right everyone benefits. We are, let’s face it, all getting older.