Where would your ‘last-time’ house move take you?

Newly published academic research takes a long, hard look at downsizing. Editor Faith Glasgow thinks through the options for those in retirement.

Over the decades, I’ve had several enjoyable conversations with friends about what a great plan it would be if, when we ‘got old’, we could all club together, buy a big house and live ‘separately but together’. We were generally pretty hazy about the precise household set-up, as we were about the financial implications of shared ownership, the location and the list of inmates – but it was a great way to pass an evening and a bottle of wine or two. Such daydreams also remind me that the idea of a readymade community of people at a similar stage of life is for many people an attractive proposition.

Few of us are likely to get it together sufficiently to set up our own private retirement community of old pals, which is probably just as well in most respects. But it does beg the wider question of how older people feel about downsizing – leaving the family home and moving to a new place, more appropriately sized and, ideally, designed with the needs of elderly residents in mind. Does the idea of living in a ‘community’ of people of a similar demographic appeal to them? And if so, what needs to be done to enable those who want to take that step to do so?

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Room for improvement

A new report by Professor Les Mayhew of the Cass Business School takes a long, hard look at the whole business of downsizing. It argues that up to a third of over-65s like the idea of moving to a smaller home, but that only a small fraction ever do so because there’s a massive shortfall of suitable housing stock.

The numbers underscore the urgent need for a proper plan by the government. By 2040, the number of people in the UK will have risen by almost 10%, to around 73 million; but the number of those over 65 will be up by 41%, from almost 13 million to 18 million. The housing issue is exacerbated by the fact that more than half will live alone.

But so far, housing policy has not moved in the same direction as the demographic trend towards shrinking households. While the number of 65-plus households is rising by around 180,000 a year, the number of retirement properties built has risen by just 7,000 a year since 2010.

Importantly, if elderly people who wanted to move to more suitable accommodation were able to do so, the family homes they now occupy would be freed up for younger families who need additional space. Professor Mayhew estimates that an astonishing 50,000 fewer homes would need to be built in the UK each year if this ‘bedroom blockage’ could be resolved by more widespread downsizing.

The report’s point is not that all older people should live in retirement communities, but that government housing policy needs to support and encourage the significant proportion who would like to do so if it were feasible. Incentives such as the removal of stamp duty on properties worth less than £300,000 for ‘last-time’ buyers would help, for example.

Of course, people come to downsizing along many paths: for younger, fitter retirees it may be an opportunity to free up cash and travel, while others may choose to move when the family home becomes unmanageable or because they want on-site nursing support. That means providing a range of retirement communities with different levels of support.

It also means government producing a joined-up strategy that involves liaison between social care, health and housing departments. The report claims people are more likely to avoid hospital and delay nursing home admission if they live independently but with on-site support, and conversely that it is easier for social care to be delivered efficiently to communities of older people than if they are scattered.

There’s a lot of sense in this report, in terms of providing ‘solutions’ for elderly people. But I find it hard to imagine healthy, youthful 70-year-olds signing up for such a life, even if they choose to leave their family home. Perhaps downsizing in retirement more realistically involves two moves – one to a simpler, cheaper property (that releases the family home back on to the open market), and a later one into a more supported community.

Moneyobserver.ed@moneyobserver.com