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An estimated 3.8 million homes in England and Wales could help free up extra housing capacity by motivating households to “right size” to more suitable properties, according to a major bank.
Barclays argued that certain incentives could encourage people who are under-occupying homes to move and help to unlock capacity in the housing market.
It suggested targeted financial incentives such as grants, vouchers or the ability to offset moving costs against stamp duty for people choosing to downsize.
More “age-suitable” housing should also be built, Barclays said, requiring local authorities to plan for this type of infrastructure.
It also said a group should be set up with industry members to look at ways to make the home-buying process simpler and less stressful.
A stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market
Mark Arnold, Barclays
Research commissioned for the Barclays Property Insights report indicated that 85% of homeowners think moving home is “always stressful”.
Local authorities should also be encouraged to work closely with housebuilders and other groups to raise awareness of new housing, the report suggested.
Analysis from Barclays and research company Ipsos indicated that an estimated 1.7 million households could be open to right-sizing within the next one to two years – but with further interventions this could increase to as many as 3.8 million.
When considering barriers to right-sizing, more than six in 10 (61%) of under-occupiers said they feel an emotional attachment to their current home because of memories and the effort they have put into their property.
Barclays said the “under-occupier market” is considerably more diverse than often implied, with a broad range of homeowners having spare capacity in their homes.
While older homeowners do form a proportion of potential right-sizers, more than a third (36%) of under-occupiers are aged between 45 and 64 years old, so incentives need to be considered across a range of consumer demographics, the report argued.
Nearly half (45%) of under-occupiers reported cost as a key barrier to moving, while having a home that requires less maintenance (39%) and having a cheaper home (26%) were also significant factors which would encourage them to move.
Barclays said the creation of financial incentives and assistance could be a powerful policy lever.
Mark Arnold, head of mortgages and savings at Barclays, said: “Housing supply shortages are well-documented and we fully support the Government’s ambitious housebuilding plans.
“However, a stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market, including the challenges faced in the demand side.
“Our public policy recommendations could help to support those people who are not currently seeking to move, to right-size into accommodation that suits their needs and saves them money, whilst unlocking crucial capacity within the housing supply chain.”
David Thomas, chief executive at Barratt Development, said: “The Barclays report highlights potential barriers to the diverse group of people who may benefit from moving to a more manageable home that is cheaper to run and continues to meet their needs.
“If some of those barriers are removed, housebuilders and local authorities can work together to increase the supply of energy efficient new homes located with easy access to amenities and community facilities to help people find their right home and help free up larger homes for growing families.”
Ipsos surveyed more than 2,200 homeowners for the research.
Lucian Cook, head of residential research at estate and letting agent Savills, said: “Overcoming the reluctance to downsize is crucial to getting more liquidity into the housing market and making more efficient use of the housing stock we have.
“Measures to reduce the stamp duty burden on downsizers would undoubtedly play a part in encouraging that. If they free up more transactions, they have the added benefit of increasing tax revenues, though inevitably government officials would want to see that they are suitably targeted and relatively easy to administer.
“Looking at the issue in the round, the prospect of an increased exposure to inheritance tax has the potential to be as much of a push as the pull of stamp duty incentives. But, tax is only part of the equation as it will be just as important to deliver more high-quality retirement housing to provide a much wider range of options for those looking to trade down the ladder.”
