We have a lack of housing stock in Britain. Not enough new houses are being built, millions of older homeowners are staying in big houses and young families are crammed into tiny flats.
There are more than 3.6 million homes with at least two spare bedrooms owned by people over the age of 65, according to the 2020-21 English Housing Survey.
“You should downsize and free up those houses”, “Why on earth would a single person need a five-bedroom detached house?”, “Pensioners are addicted to their spare rooms” — these are the arguments you hear all the time.
The argument for moving to a smaller property at this time of life can make a lot of sense. For example, last week the estate agent Savills claimed that downsizers across England and Wales could unlock an average of £305,090 by moving from a four-bedroom to a two-bedroom home. That could surely go a long way towards resolving any pension gap issues.
So what’s stopping older homeowners from making the move?
• The unexpected cost of downsizing your home
Well, it’s not that simple. Pensioners are not commodities: their sole purpose is not to make room for families and live on meagre budgets so that they can leave an inheritance. When you have spent years in a property, it’s not just a house but your home. It’s where you saw your children take their first steps, where you got so used to jumping over that creaky floorboard on the landing that you do it without thinking. It’s where you had the best and the worst times of your life.
Advertisement
• Should pensioners pay more tax?
Even if you’re ready to part ways, there are many obstacles. Cost is a big one — in particular stamp duty. Some industry experts argue that the tax is stopping homeowners from moving and suggest that making those who downsize exempt would help to tackle the housing crisis.
Stamp duty is charged at 5 per cent of the value of a property between £250,001 and £925,000, so downsizing to a £350,000 home would mean a £5,000 bill. This is a sizeable sum when you also have estate agents, conveyancing fees, and moving costs to consider.
But the main problem is not cost. I very much doubt we would see downsizers flooding the market if stamp duty were abolished. The biggest deterrent is finding a property you want to move to. “Downsize to what?” one reader commented. “A soulless flat with no garden and extortionate fees,” replied another.
• How to bring landlords back to buy-to-let
Advertisement
Many want to stay in the area where they have friends and family. And not everyone wants to move to a retirement flat (which often comes with its own problems, including high service charges). The perfect solution for many would be a two-bedroom bungalow, but these are scarce. Less than 10 per cent of the new property listings in the year to May 2023 were bungalows, according to the estate agent Knight Frank.
Cutting stamp duty for downsizers might be a vote-winner, but it won’t solve the problem — the government needs to get building.
