We’ve heard of ‘Downsizing’… but could ‘Rightsizing’ hold the key to meeting older people’s housing needs?
Older people are, quite rightly, fed up with headlines suggesting that they should downsize to help solve the nation’s housing problems. Perhaps a better solution would be to reframe the discussion in the direction of creating aspirational homes we’d be happy to move to… and to make an argument about ‘rightsizing’ instead.
If you missed the screaming headlines in the Daily Mail recently, let me remind you: ‘Anger as watchdog tells OAPs to downsize to tackle housing shortage’. Not surprisingly, the headlines don’t tell half the story. In fact they don’t tell the correct story at all. (And on a divergent topic, ‘OAP’ is not an expression that sits well with me, any more than describing people in their 60s as ‘elderly’ – another common and lazy moniker the media haven’t grown out of.)
Read beyond the headlines, or (even better) read what was actually said at the ‘Great Mortgage Debate’ held by the Financial Conduct Authority and you find these words, spoken by Lynda Blackwell:
“There are lots of questions about whether it’s right that the government should focus on the first-time buyer when in fact we have a real issue about the last time buyer.”
“There are borrowers who pay off the mortgage who are sitting in a very big house: does there need to be thought given to how we build more appropriate housing for retired people in the right places.”
“There is a big debate to be had about whether the government’s focus is actually in the right place.”
Yes, there is quite a gap between those words and the ones that the Daily Mail (and Daily Express) reported. But when have facts ever got in the way of a good headline? What Lynda Blackwell was insightfully observing is that many older people are living in homes that are probably too big for their needs and budgets. Those who are ‘asset rich and cash poor’ represent a large swathe of older people: around one million live in homes they own and are considered ‘non-decent’.
Older people’s housing as a ‘solution to the housing crisis’
If – she argues – they were incentivised to downsize, and also given the choice of housing that would make downsizing appealing, they might well be persuaded to sell their home to a family who actually needs that sort of space. The double benefit (to themselves as well as society) is that this could cut their outgoings and release funds to help them enjoy a more comfortable retirement. At a time of chronic housing shortages, as well as a point in time when returns from retirement savings (from annuities and drawdowns as well as deposit accounts) are suffering, many of us could fruitfully look at this as an option.A large swathe of older people (currently estimated as one million) may never actually pay off their mortgage – instead opting for lifetime mortgages, which still require servicing. Again, downsizing offers a way out.
Not surprisingly, in a survey we carried out among RetireEasy subscribers, one third listed downsizing as one of their planned future options in order to release an average of 33% of its value: a sizeable amount. And the average age at which they envisage doing that is at 65. So the will is there, and so too the recognition of the benefits. But (of course!) it’s never as simple as that. Encouraging large numbers of us to up sticks will only be a pipedream until the chronic problem of supply is addressed.
Back to the caveat in Lynda Blackwell’s speech: the problem of “…how we build more appropriate housing for retired people in the right places?”. Quite simply, at the moment, that isn’t happening. Not only are precious few new ‘retirement housing’ units being built for the private sector (less than 2,000 last year, expected to top 4,000 in 2015) but – let’s face it – not everyone wants to live in a retirement complex. Don’t get me wrong: some of them are fantastic. But not all of us are ready to distil our lives down to two bedrooms, make our home in an apartment or give up our garden. Or move many miles from our friends and family. More thought, more options, more supply and better design are needed if we are to make downsizing to dedicated housing more popular. All this at a time when we’re only building a fraction of the homes we need for all generations.
Longer term, it’s a no-brainer that all homes are built to a standard that allows them to be still used by everyone when their mobility reduces. So it becomes all-age friendly. Sadly, the golden opportunity to make building to Lifetime Homes standards mandatory was passed up in the last Government’s building regulations – making them a ‘nice to have’ only. Many more would simply like to stay in a mixed community where people of all ages can be mutually supportive. Large numbers would opt to live in a bungalow if they could, perhaps with a chalet design – but precious few are now being built because of pressure on density.
There is a big debate to be had on how we create more aspirational homes for older people within the present planning system – especially as local authorities will prioritise affordable homes. We’re living in an ageing society – let’s start the process of planning for it as soon as possible.
So could ‘rightsizing’ be the way forward?
Back to the here and now, we can always move from a large home to a smaller one and cash the difference. Or from an expensive area to a cheaper one. So if you DO see a chance to move to a smaller property that meets your needs as well as your aspirations, what are the things to consider? Perhaps, at this point, we need to reframe the entire argument and take out the potentially negative implications of the word “downsizing”. It sounds like a retrograde step. But if the move being contemplated is to take us into accommodation which simply better suits our needs, now and into the future, “rightsizing” sounds far more appropriate.
Having gone through the “let’s move” process myself recently, I was surprised when my wife and I listed our priorities. No, they’re not those of a young family, but many things were still in common. We’re now in our mid 60s, so planning for our 70s, 80s and beyond, we should sensibly be looking at accommodation that is easily managed and maintained, is designed to allow for our increasingly less flexible limbs and (looking ahead) is close to public transport links. However, that doesn’t mean living in a boring box with a handkerchief-sized lawn or courtyard outside. Even less, one with very high service charges or high exit fees, or where you can’t keep pets. We still need spare rooms for family visits, a garden for the grandchildren to lay waste to when they come and also easy access to shops, pubs and local activities, as well as cycling and dog-walking routes. We also wanted to be close to what will be our “informal support network” in years to come (ie our children!). We want to be part of an active community.
What are YOUR priorities?
Your priorities as a “last time buyer” (yes, I agree it’s not the most positive of phrases!) may be very different, but setting them down can be hugely helpful when starting your property search on Rightmove. It certainly allowed us to dismiss 50% of local properties right away. But do bear in mind these factors when considering “rightsizing”. Any house move is expensive – agents fees and legals alone will set you back well north of £10,000, perhaps even twice that. And that’s before finding fixtures and furnishings that fit, and physically making the move. And also work out well in advance just how much you can afford to spend – and still have a comfortable retirement. What will happen to your weekly and monthly outgoings? If you’re planning to release cash, how and where will you invest it?
When you add up the sums, you might even come to the conclusion that your capital will gain more in value right where it is, locked up in your home… and decide to let that out and rent somewhere less expensive. Once you start drilling down to these sorts of calculations, you might find it handy to test out a few scenarios on the free RetireEasy LifePlan calculator.
By Tony Watts OBE, Director www.retireeasy.co.uk