Research by Age Partnership, a retirement income adviser, recently found that English people aged over 55 currently hold more housing wealth (£1.5 trillion) in their homes, more than the annual GDP of Italy (£1.4trillion). This number is made up of the 39% of that age group who have no outstanding mortgage, but many more will have significant wealth in their properties meaning this is probably a conservative estimate. Added to that, the over-55 population is due to grow by a third in the next 20 years, meaning that by 2036, not taking into account house price inflation, that number will be £1.9 trillion.
However, Stacks Property Search diagnose the dearth of housing stock is more about people living in the wrong house, and less about price and wealth.
There are 750,000 empty houses in the UK, and if these were combined with the spare accommodation enjoyed in particular by the ’empty nest’ generation, there would be a significant increase in availability.
Changes in inheritance tax rules mean that grandparents will continue to live in houses that are too big for them because it makes sense financially, but many would prefer to downsize and release capital to put a roof over their children’s heads. Perhaps this could be offset by a spare bedroom levy?
The cost of moving has become so high in terms of fees and taxes that the turnover of property has slowed dramatically. And the buy-to-let market has grown because the older generation choose to invest in property rather than pensions, and other financial instruments sold by a financial services industry that’s regarded with some suspicion.
“Generation rent” isn’t necessarily a bad thing. Buying a property costs around 6% to 8% of equity in terms of fees and this goes some way to justifying rent paid in the short term for a more mobile generation.
For those who do want to downsize, it pays to be realistic about what your decision will entail. You will need to accept that you are going to get a lot less house for your money. Trading down from a large five or six bedroom family home to a three or four bedroom cottage will release about 30% of the capital, but result in only about half the square footage, and half the outside space.
But remember that, with an ageing population, this can be a very good investment, as demand for good properties to accommodate a more elderly population is likely only to rise.
We have more on how your local Stacks Property Search expert can help you navigate the process here.
Also seen in:
Property Industry Eye : Agents question if it’s right to celebrate how much property wealth over-65s hold
It’s easy to assume that the decision to downsize is straightforward; after all, you’ll presumably have cash to spare once you’ve sold ‘the big house’, but of course, the reality is far from simple. In our experience, it is rarely finances that are the obstacle to downsizing. More significant are a...
It’s possible that you may not have sold and bought property for many years and things have changed dramatically over the decades. Taking advice will ensure that you are supported every step of the way. Here are our top 7 tips for downsizers : 1. Don’t just consider your needs as they are...
Can a garden be too big? And when is a garden too small? As professional property finders, Stacks often hear that ‘the garden is not the right size’, which may well be true for the individual buyer, but we do believe that there is a general expectation that the ‘garden is...
While London’s urban young are wondering when the right time is to cash up and move out to the country, a growing band of the rural old are considering a move in the opposite direction. Sara Ransom of Stacks Property Search says, “An increasing number of retired homeowners are cashing in...
Call us on +44 (0) 1594 842880 or complete the form below
When making probably the most important financial decision of your life, it pays to have the right advisors at your side.
A holiday home is often an interesting mix of investment and heartfelt connection. You want to use it, but you may well also be keen for others to use it too. We can advise you on what factors to consider in making your decision. And we can then find the perfect holiday home for you to enjoy.
Others say, ‘location, location, location’. We say, ‘location, purpose, price, capital growth, rental returns’… the list goes on. Knowing the market is critical. Local knowledge is key. We ensure all aspects of your investment decision are addressed. Finding, analysing, negotiating, and completing… it’s what we do.
Relocating is time consuming and stressful. We regularly work with clients who live abroad. We hunt, short-list, prepare your viewings, and make the search process as easy as possible. We oversee the negotiations, manage the conveyancing, and deal with the headaches, so you can concentrate on other aspects of your move.
Retirement or semi-retirement is an exciting stage in life. Finding the right home to live in and enjoy it to the full is important. We know that and will do all that we can to understand what you’re looking for… before starting to search. And search we will, until we find the house of your dreams.