Over half of Britons are living in homes that are too large for their needs. We need incentives for those over 65 to downsize, rather than punitive property taxes, argues Nick Sanderson
Nationwide recently published data showing that the number of homes with two or more spare bedrooms has risen to 53 per cent, an increase from 44 per cent in 2005, as reported by .
Reflecting on these figures, it's crucial to acknowledge the significant change in how we utilise our homes, particularly over the past five years. Remote working has transformed spare rooms into home offices, yet even taking this into account, a considerable portion of the º£½ÇÊÓƵ's housing stock remains under-occupied.
Higher property taxes will provide little motivation for older homeowners to downsize
The International Longevity Centre explored this issue in 2023, focusing specifically on older homeowners. Nearly nine out of ten individuals aged between 65 and 79 live in under-occupied housing, and over half have two or more surplus bedrooms.
Considering that only 11 per cent of property purchases in England involve buyers aged 65 and over, the lack of movement at the top of the ladder is striking and has a clear knock-on effect further down the ladder.
It's not merely an inefficient use of space; it indicates a broader systemic problem in our housing market. Older homeowners aren't vacating large family homes, which are often unsuitable for their evolving needs, and the reasons are manifold.
It's costly, there's little incentive to do so, options are limited, and leaving what may have been the family home for several decades brings significant emotional turmoil.
However, I'm concerned that this aspect of the housing stock challenge is a problem that policymakers are overlooking, instead concentrating on simply building more. This somewhat narrow-minded approach could be exacerbated by the rumours we've heard recently about a blanket property tax on homes over £500,000 paid at the point of sale.
Any tax reforms that could discourage sellers – and crucially downsizers – and slow down the housing market should be avoided. What the market desperately requires is movement.
Movement that liberates large family homes and unlocks some of the £2.89 trillion in property wealth held by over-65s, and gets people living in properties that suit their needs.
How to get the housing market moving
The solution is twofold.
Firstly, we must create desirable and attractive places for people to live and where they genuinely want to downsize to.
We can't anticipate everyone to choose retirement village living, but we do need to offer a wider range of high-quality options from modern, well-designed flats, apartments and cottages to vibrant retirement living communities.
Currently, the º£½ÇÊÓƵ constructs only 7,000 later-living homes each year, but to meet increasing demand and genuinely unblock the housing system, delivery needs to scale to between 30,000 and 50,000 annually. Planning reforms and a mandate on the provision of age-specific properties, as part of new developments, will aid this.
Secondly, we require incentives that encourage moving, rather than penalising it. As the government tests the water on policies ahead of the Autumn Budget, policymakers must think beyond blunt tax instruments.
We need a system that supports downsizers with targeted reliefs, particularly for those moving into specialist retirement living communities.
Addressing both the supply of suitable homes and the financial incentives to move would mark the beginning of a new chapter for the º£½ÇÊÓƵ housing market. One which gets people living in homes that align with their needs, and the benefits would be substantial.
Nick Sanderson is CEO and founder of Audley Group
