Downsizing Exodus: 5.7 Million Older People Eye a Move Now, Rising to 11 Million in Under Twenty Years
LONDON, August 2, 2017 /PRNewswire/ --
- Downsizing exodus: 48% of pensioners (5.7 million people) are considering moving to smaller homes, 4% or 300,000 more than last year, a figure rising to more than 11 million in 2036, highlighting the growing attraction of downsizing
- Stamp duty exemption bonus: 1.2 million extra adults aged 65 and over would be encouraged to move with a stamp duty exemption when downsizing to further stimulate activity in the housing market
- Housing chain impact: Downsizing boom would release homes with a combined value of some £720 billion
- Equity release windfall: Older people expect to release £80,000 of equity on average when downsizing, equalling £450 billion. The rising number of people looking to move in the future means more than £877 billion in equity could be released in 2036[1]
The UK is facing the prospect of a downsizing exodus, according to McCarthy & Stone's annual Retirement Confidence Index (RCI). Developed in conjunction with YouGov, the research shows how 5.7 million people aged 65 and over are considering downsizing or would be encouraged to move with a one-time stamp duty exemption for older people downsizing, with the figure set to increase to more than 11 million in fewer than twenty years (2036).
Downsizing exodus on the way
The first part of McCarthy & Stone's in-depth study entitled Retirement Housing: Integral to an ageing Britain - an annual study of over 3,000 UK adults aged 65 and over - reveals that 38% of the age group would consider downsizing now, with an additional 10% encouraged to move with a stamp duty exemption, equalling 48% - a rise of 4% from the prior year.
Based on the current population size of those aged 65 or over[2], this would mean that approximately 5.7 million could potentially start packing their bags, up from 5.4 million last year and highlighting the growing appetite for downsizing among the elderly, if the right type of properties were available. Even without a stamp duty exemption, the number is as high as 4.5 million this year. An additional 1.2 million would therefore be encouraged to move by the incentive, with the housing released acting as a huge benefit for first-time buyers and second-steppers.
This number is only set to increase as the UK's population ages rapidly. Based on population projections for the age group, the retirement housebuilder highlights the urgent need to focus on the UK's preparedness for this estimated downsizing exodus.
Downsizing numbers to nearly double by 2036
Assuming a conservative growth of 4% every five years[3] in the number of adults aged 65 and over considering moving and encouraged to move with a stamp duty exemption, figures for elderly movers is set to almost double: 11.1 million are estimated to want to move in 2036 based on current population projections by the Office for National Statistics (ONS)[4]. This level of demand far outstrips the c.141,000 units of owner-occupied retirement housing built in the UK to date[5].
Commenting on the findings, Clive Fenton, Chief Executive Officer at McCarthy & Stone, said:
"The risein 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%, which will expose the UK's grossly inadequatelevel of suitable housing for older people if we maintain the current status quo. With over 11 million people considering moving to a more suitable propertyby 2036, the Government needs to put specialist retirement housing and other forms of accommodation for older people higher up the agendaor 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."
Freeing up the housing chain
The research also highlights how enabling people to downsize would help unlock the UK's housing chain and release a significant level of UK housing stock, according to the retirement housebuilder.
According to calculations, downsizers moving now would help unlock 2.8 million bedrooms across the UK.
In addition, adults aged 65 and over have c. £1.5 trillion of housing wealth[6]. Taking the rate of 48% of adults aged 65 and over who are looking to downsize or would consider it with a stamp duty exemption, were the homeowners among them to proceed this would release homes with a combined value of some £720 billion,[7] which could be purchased by families and first time buyers.
Clive Fenton noted: "Despite the warning signs, the UK's housing stock is woefully unprepared for the demographic shift to an ageing population, whichhas created a new 'Generation Stuck' dilemma. While desiring to move, as our study clearly shows, those in later life are discouraged by the lack of suitable housing and the cost. A stamp duty exemption would make the process more attractive, and the figures show that over a million more older people would be encouraged to move as a result. Encouraging moves at the top end of the housing chain will stimulate activity, release millions of under-occupied family-sized homes onto local markets, and help younger people move up the ladder. It's a win-win."
Equity release windfall of over almost half a billion from downsizing
According to the findings, respondents expect to release approximately £80,000 (£79,318) of equity on average when they downsize. If all 5.7 million adults aged 65 and over who currently express a desire to move proceed with it, this would mean that c. £450 billion of equity would be released to help with retirement costs or to spend as they please.
Assuming the average amount of equity released remains constant and in light of the downsizing moves noted above, this would mean that in 2036, if the 11.1 million adults aged 65 and over who consider moving or are encouraged to do so actually moved, this would help release £877 billion of equity.
Clive Fenton adds: "The ability to release equity from the value of homes in later life provides a strong economic argument for downsizing. As the strain on the social care system rises, we will alsofind more and more people tapping into their housing wealth to cover the costs of retirement and care."
In the second part of McCarthy & Stone's Retirement Housing: Integral to an ageing Britain study, social care and the views of adults aged 65 and over on the matter will be explored in greater detail.
Clive Fenton is available for interview if required. A case study on downsizers is also available.
Notes to editors
About the survey
All figures, unless otherwise stated, are from YouGov Plc. The total sample is 3,001. The data has been weighted to be representative of UK adults age 65+. Fieldwork was undertaken between 14/06/17 - 27/06/17. The survey was carried out online.
About McCarthy & Stone
McCarthy & Stone is the UK's leading retirement housebuilder, with a c.70% share of the owner-occupied market[8] The Group buys land and then builds, sells and manages high-quality retirement developments. It has built and sold more than 51,000 apartments across more than 1,100 developments since 1977.
McCarthy & Stone's developments offer one and two bedroom apartments across the country in a wide variety of locations, from city centres to rural villages and coastal areas. Retirement Living developments provide independence in private apartments designed specifically for the over-60s, as well as facilities such as shared lounges and guest suites that support companionship. Retirement Living Plus developments (formerly Assisted Living), which are designed specifically for the over-70s, offer all of this plus more on-site facilities such as restaurants, well-being suites and function rooms. Importantly, they also provide flexible care and support packages to assist those needing additional help. Finally, Lifestyle Living developments, (previously known as Ortus Homes), are exclusively for over-55s and are intelligently designed for downsizing to enhance customers' leisure years.
All developments built since 2010 are managed by the company's in-house management services team, providing peace of mind that it will look after its customers and their properties over the long term. This is a key part of how McCarthy & Stone seeks to enrich its customers' lives. McCarthy & Stone Management Services (MSMS) provides management services in Retirement Living and Lifestyle Living developments. Each Retirement Living development typically has a dedicated House Manager on-site five days a week during working hours, managing the day-to-day running of the development while also helping to facilitate various social activities. Each Lifestyle Living development has a visiting manager who is in charge of all aspects of property maintenance.
YourLife Management Services (YLMS), which is owned 50/50 by MSMS and Somerset Care Group, a leading not-for-profit care provider, provides management services, domestic assistance, catering, personal care and additional support in Retirement Living Plus developments, and each development is run by an Estate Manager and a team of staff to deliver these services, 24 hours a day, 365 days a year.
McCarthy & Stone is pleased that the quality of these products and services means that more than nine out of ten customers would recommend the company to a friend, ensuring the company has received the full Five Star award for customer satisfaction from the Home Builders Federation for 12 years' running. McCarthy & Stone is the only UK housebuilder of any size or type to achieve this accolade, which is every year the awards have been run. It also won 'Best Retirement Scheme' at the annual Housebuilder Awards in 2016.
There is a growing demand for specialist retirement housing of this type, with the number of people aged 85 and over in the UK expected to more than double between 2015 and 2035, from 1.5 million to 3.2 million, and the number of people aged 65 and over expected to increase by more than 50%, from 11.6 million to 17.2 million[9]. According to research by Demos, 1 in 4 over 60s are interested in retirement living[10],, yet only c.141, 000 units of specialist retirement housing for homeowners have been built[11].
1. For the purposes of this calculation, no house price inflation is considered
2. The Office for National Statistics (ONS) records that 18.0% of the UK population in 2016 (65,648,054) was 65 years and over, so approximately 11,814,085 falls into this age group, Overview of the UK population: July 2017 [ https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/july2017 ],
3. Compared to a 4% increase in just one year to 48% in 2017
4. In 2036, the UK population is estimated to be 73,360,907 of which 23.9% would be 65 years and over so 17,449,793. Based on a 4% growth rate every five years in adults aged 65 and over considering moving and encouraged to move with a stamp duty exemption, this would mean that 63.2% would be looking to move by 2036 (or 11,059,869). ONS, Overview of the UK population: July 2017 [ https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/july2017 ],
5. Elderly Accommodation Counsel, April 2016
6. Savills - Spotlight on Housing for Older People, 2017 [ http://pdf.euro.savills.co.uk/uk/spotlight-on/spotlight-housing-for-older-people-2017.pdf ]
7. This is calculated using the value of housing equity owned by those aged 65 and over (£1.5 trillion) multiplied by the percentage saying they are likely to move
8. Based on 3,453 registrations of cross tenure properties specifically designed for the elderly with the NHBC during calendar year 2015, of which 2,672 were registered by McCarthy and Stone.
9. Population projections by the Office for National Statistics (2014 based).
10. Demos- Top of the Ladder (2013)
11. Elderly Accommodation Counsel (April 2016)
For further information, please contact:
Powerscourt
Mazar Masud/ Victoria Heslop/ Chloe Rutland
Tel: +44(0)20-7250-1446
Email: McCarthy-Stone@powerscourt-group.com