Over 65s are not the villains of the housing market

Despite an extension of the Mortgage Guarantee Scheme in the Autumn Statement, any meaningful measures that could translate into an increase in housing transactions were noticeably absent.

Hopes had been raised we might see some form of newly disguised Help to Buy scheme or a stamp duty cut for first-time-buyers or those looking to downsize - but disappointingly, no.

The stamp duty cut we saw post-Covid did wonders to boost the housing market, as did Help to Buy. Given where the cost of borrowing is right now, the first-time-buyer market could certainly do with some sort of stimulus.

In the absence of any significant help from the Government for first-time-buyers, we are increasingly seeing some disgruntlement directed towards over-65s, residing quite happily in their three/four/five-bedroom homes.

Zoopla recently highlighted the reluctance of the over-65s to downsize and how this is contributing to a national shortage of three-bedroom homes. Its figures show nine in 10 homeowners aged over 65 either live alone, or with just their partner, yet more than seven in 10 live in homes with three bedrooms or more - equating to 10 million spare bedrooms across the UK.

Those hesitant to move cited a desire to host Christmas, the stress of moving and wanting to pass the home down to family members - interestingly, stamp duty or the cost of moving, did not come into it.

While there is logic in older homeowners downsizing, in reality, the situation is very rarely so black and white, with many also holding on to their home for sentimental reasons.

And even if such homeowners did want to move, where would they move to? The trusted favourite of the traditional retiree - the bungalow - is currently on the ‘critically endangered’ list, according to the National House Building Council (HNBC).

There were only 228 registrations in Q3 2023 for new bungalows - down 70% on the same period last year and the lowest figure recorded by NHBC in its 80-year history.

We are unlikely to see any increase in developers building bungalows anytime soon, given they can generate more profit from a plot of land by building a three-bedroom detached house on it as opposed to a bungalow.

Instead, we are seeing modern-day retirement blocks, with lifts and energy-efficient features being offered as a solution and while no doubt this will appeal to some, I’m not convinced all over-65s will be enthralled at the idea either.

Especially when we have effectively sold them the dream of being able to stay in their home through equity release, allowing them to draw on all of the many thousands of pounds their home will have gained in value - potentially over the past few decades.

Ironically, the lack of bungalows on the market can also be attributed to their popularity among first-timers, who have seen the potential and money to be made from building upwards and creating a two-storey property. Something that was not helped by new rules introduced in August 2020 permitting bungalow owners to expand upwards without requiring planning permission.

Just a few years after their introduction, we are already hearing about local councils taking matters into their own hands and blocking such extensions in order to preserve the number of bungalows in the area.

Although the Government did announce some new investment in housing and planning in the Autumn Statement, such as an extension of the Affordable Homes Guarantee Scheme and support for local authorities to deliver nutrient offsetting schemes, these are seemingly just a drop in the ocean when it comes to the wider housing problem.

There is no doubt that more starter properties for first-time-buyers are needed, but I’m not sure these are going to be found by encouraging older borrowers to downsize. Instead, the focus should remain on encouraging the Government, and developers, to create new homes and schemes that incentivise and help more first-time-buyers onto the housing ladder.