Equity Release
One third of over-55s considering downsizing
A third of over-55s in Great Britain are considering or expect to at some point consider downsizing, but a lack of supply means many are unable to find appropriate properties.
The figure of older people interested in downsizing rises to 48% when considering those who have already moved to smaller homes, figures from the International Longevity Centre showed.
However, the report showed that many cannot downsize due to a lack of appropriate properties.
The centre said the problem could be tackled by giving retirement housing enhanced planning status. This would make it exempt from a range of planning restraints, and could encourage developers to build more homes.
The homes could also be made more affordable by taking the social benefits of the home into consideration when appreciating land values. This would be beneficial in areas that have lower levels of equity in the local population, as developers could see it beneficial to expand in those areas.
Some 29% of those who had already downsized, were considering it or expected to consider it in the future released, or expected to release, more than £100,000 in equity. The centre said this shows the high levels of wealth many older people have in their homes.
According to Key Retirement, pensioners are sitting on property wealth exceeding £1.71bn. However, up to a fifth of people over-estimate how much their property is worth, Bower Retirement reported in early January.
Exemption from Stamp Duty could help
The International Longevity Centre’s report said downsizing could be made more affordable by exempting older households from Stamp Duty Land Tax (SDLT) when they move into a smaller home or specialist retirement housing.
It argued this would encourage more people to move, while the overall increase in transactions could help ensure the Treasury does not make a loss. It was revealed today that changes to SDLT made in 2014 has cost the British taxpayer £662m.
The report said it might be possible to offer financial support to cover moving costs, or to include late life buyers who face an affordability gap into the Help to Buy: Equity loan scheme.
The scheme allows buyers with a 5% deposit to borrow an equity loan of up to 20% of the value of a new build home, allowing the borrower access a mortgage with a lower loan-to-value.
