McCarthy and Stone is the “UK’s leading retirement housebuilder” so naturally they have an interest in stressing that priority should be given to such housing.  Nonetheless a recent survey YouGov conducted among pensioners makes for interesting reading.

It says:

“48 per cent of pensioners (5.7 million people) are considering moving to smaller homes or would be encouraged to do so with a stamp duty exemption. This is four per cent (or 300,000) more than last year, a figure rising to more than 11 million in 2036, highlighting the growing attraction of downsizing.”

Clive Fenton, Chief Executive Officer at McCarthy & Stone, said:

“The rise in the number of those who want to downsize is an inevitable consequence of the UK’s rapidly ageing population. Within the next twenty years, those aged 65 and over are expected to grow by almost 50 per cent, which will expose the UK’s grossly inadequate level of suitable housing for older people if we maintain the current status quo. With over 11 million people considering moving to a more suitable property by 2036, the Government needs to put specialist retirement housing and other forms of accommodation for older people higher up the agenda or we will simply lack the necessary infrastructure and support services, particularly from a health and social care perspective, to deal with such a huge demographic shift.

“The Government must build on the positive wording in the Housing White Paper and consider how it can influence market supply. The Government’s Help-to-Buy scheme and other initiatives aimed at first time buyers have spurred market supply of homes at that end of the spectrum but has done nothing to help the housing choices of those in later life. We really need a strong planning policy presumption in favour of retirement housing and other forms of suitable housing for our ageing population.”

I would like to see a general easing of planning restrictions to allow an increase in the housing supply – with the proviso that it should be attractive: which could be achieved by giving residents a big say on its design.

Given that the problem is on the supply side, rather than the demand side, Stamp Duty is not fundamental. But this report reminds us how Stamp Duty certainly makes the situation worse. Amidst a housing shortage it is utter madness to punish those (whether pensioners or others) who wish to move from a large home to a small home. The present threshold at which it kicks in is a miserably low £125,000. Of course that hits many first time buyers – not only in London. By gumming up the works it may well deprive The Treasury of revenue. If someone stays put in a half million pound house to avoid the Stamp Duty involved in moving to a quarter of a million pound house then there is no sale – and no Stamp Duty revenue. If the taxman is too greedy then the market freezes up – the number of transactions falls and so does the revenue.

Local authorities should also consider the implications for social housing.  In my borough of Hammersmith and Fulham we have the absurd situation of people waiting over a year for sheltered housing accomodation. Often these will be single people in three bedroom council homes. Those larger homes could be made available to families in overcrowded conditions or temporary accommodation – which is often both expensive and poor quality. The most cost-effective way to help everybody is to focus on increasing the supply of good quality, attractive, well-managed sheltered housing. That will probably mean it is not run by the council – but that local authorities could help to get it built using Section 106 funds.

It is perfectly understandable that many elderly people choose not to move out of the homes they are settled in. But the present system – which penalises those who wish to downsize – is utterly perverse.