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Categories:Mortgages

Room at the top

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A new report on the housing sector claims that older people are blocking up the market by refusing to downsize from homes that are bigger than they need.

The report is from new thinktank the Intergenerational Foundation which says its aim is to promote “intergenerational fairness”, which seems to translate as too much Government time and money is targeted at older, and often wealthier sections of the population.

The report, Hoarding of Housing, suggests that 33 per cent of all privately owned housing is under-occupied. It claims a lack of movement at the upper end of the market is putting pressure on housing stock, with the resulting increase in house prices meaning bigger family houses are unaffordable and many people are pushed into the rental market as a result.

Report co-author Matthew Griffiths said: “It is perfectly understandable that retired people cling to their home long after it has outlived its usefulness as a place to bring up a family in. But there are profound social consequences of their actions which are now causing problems in a country where new housebuilding is almost non-existent.”

The foundation says this lack of movement in the housing market is leading to a profound shift in the distribution of property and wealth. It says since 1991, the number of owner-occupiers in older age groups has increased dramatically, up by 14 per cent for the 65-74 age group and up by 73 per cent for those over 75.

In contrast, the number of owner-occupiers under 35 has dropped sharply. Since 1991, 30 per cent fewer people aged 24-35 own their own home.

Foundation co-founder Angus Hanton said: “The housing crisis is increasingly an issue of how our housing stock is shared between younger and older generations. The divide between the housing haves and have-nots has moved from being one dominated by wealth or class to one dominated by age.”

The foundation suggests a number of policies to counteract the problem of under-occupation among older people. These include reducing barriers to moving home and downsizing, such as the removal of stamp duty for anyone wanting to downsize, as well as encouraging more property to be specifically built to target this demographic.

It also proposes several slightly punitive measures, or nudge measures as they are described in the report. These include removing some benefits from anyone living in a house worth more than £500,000, introducing a property value tax and removing council tax concessions for single people.

But Saga director general Dr Ros Altmann says presenting the issue in a confrontational way is unhelpful.

She says: “Using phrases such as ’clinging on to housing’ is inappropriate and unhelpful. The family home is about more than just bricks and mortar and I really feel that it is unhelpful to point to older people who live in a three-bedroom house and somehow say they do not deserve to be in it.”

Altmann says blaming older people for inflating house prices overlooks the more significant role the planning system has played in the shortage of housing, as well as the effect of financial policy and regulation which encouraged and allowed younger people to take on unsustainable levels of debt and fuelled the housing boom.

She says: “The biggest problem we have in the UK is that the existing housing stock simply does not reflect this need. The majority of smaller places are simply not suitable for older people. Newbuild flats are usually designed with the young in mind, not older people within our community. What we really need is purpose-built housing that is still of a reasonable size that would encourage people to downsize if they want to, which is something that is in scant existence at this moment in time.

“I am also concerned about the inter-generational conflict here and it almost strikes of jealousy in a way. If house prices are too high, then market forces should be left to work. Unfortunately, this has been interfered with by policy which encouraged younger people to take on more debt than they can afford to purchase a house and policy since has been about trying to bail them out of that debt.”

Altmann agrees that it would make sense for the existing housing stock to be used more efficiently but says you cannot force people to move home. She says: “It does make sense for people, as they get older, to consider whether they want to live somewhere else but this must be entirely their choice.”

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