More downsizing could release almost three million homes into the market according to the Royal Institution of Chartered Surveyors.
Its latest policy review suggests that various measures could go some way to alleviating current housing problems.
These include the expansion of affordable ownership via planning controls insisting developers offer a percentage of new homes for 'affordable rent', regulations to oblige second home owners to release their properties for rental, and the creation of Self Invested Personal Pensions which would allow investors to put their money into Build To Let schemes.
But downsizing is considered perhaps the most effective way of improving supply in the market.
“We would like to see central and local government provide older people with the information, practical and financial support they need to downsize if that is their choice. This might include offering a fund to support with moving costs – Bristol City council is already piloting a great scheme along these lines – or perhaps a stamp duty discount" says Jeremy Blackburn, head of policy at RICS.
“Almost a third of over 55s have considered downsizing in the last five years yet we know only seven per cent actually did" he says.
RICS believes that the most consistent feature of the housing market over the last 18 months has been a shortage of homes on sale with stock levels on surveyors’ books dropping to lows not seen for at least three decades.
"If we are to get to grips with this country’s housing crisis, we need to look at supply-led measures across government and the wider industry in order to get the market moving” says Blackburn.
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In a perfect world - supply and demand etc etc.
To sway most OAP's to up sticks needs key factors:
* interest rates on savings are low, so many feel equity release vs larger home equity growth doesn't stack up
* stamp duty for many older people is a big put off to move to release stock
Maybe government should trial a 18-24 month trial to encourage the silver surfers better savings interest rates, for released funds to counter balance equity rise in bricks and mortar and incentivise stamp duty AND build more suitable retirement flats and bungalows.
I would start with a stamp duty change for people downsizing. A one off or age specific. I would not focus on other things until more is know about the success of a stamp duty change.
As to interet rate returns. While it is a concern, it is not really something that should be tangled up with housing policy. We live in a low interest rate world. If the older person wants to pay the property market and pick up more appreciation, so be it. If they need an income, they should remember that inflation is lower than the current rates out there so they are earning a positive return. In the 'old' dates rates were high yet so was inflation. Hence the 1% of so difference really has not changed much.
Yes, in order for this to work there must be some sort of incentive to encourage those silver surfers to up sticks. A stamp duty could the roadblock which is preventing them from moving, so why not trial a period where this tax is reduced?
@MoneyGardenCash living in a big house can be expensive on a limited income http://bit.ly/1VhqfM4 #moneyinyourgarden
What we need to encourage the silver surfers to 'up sticks' is to provide suitable living accommodation. The equity-rich mature home owners have a dread of the word 'downsizing' because they imagine small one or two bedroom 'shoe boxes' with communal lounges and laundries. What a large proportion of them want is a house with plenty of living space to accommodate their large pieces of family furniture but with fewer bedrooms than their older homes. To my knowledge, Beechcroft Developments is one of the very few companies to provide this - which is why the company is flourishing - selling quickly and in a position to buy more land.
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