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Why helping older homeowners to downsize could improve the housing crisis


By Ryan Bembridge

Published: 25th February 2019 Last updated: 9th August 2019

A think tank has recommended for both the mortgage industry and the government to do more to help older homeowners downsize, rather than focusing so heavily on first-time buyers.

The UK is often talked about as being in a ‘housing crisis’ due to house prices rising out of kilter with people’s incomes, and this is generally blamed on a lack of house building to keep up with an ever-rising population.

However the report, from the Centre for the Study of Financial Innovation by professor Les Mayhew, with assistance from Aldermore Bank, said encouraging older homeowners to downsize could free up housing stock for others who need it most – and ease the severity of the housing crisis in the process.

Government recommendations

The study pointed the finger at the government for putting all its focus on first-time buyers, rather than ‘last-time buyers’.

Stamp duty land tax was waived for first-time buyers on the first £300,000 of the value of property in 2017, but last-time buyers still have to pay the tax in full. The study suggested that there could be stamp duty tax breaks for those downsizing, while it recommended for the government to reform capital gains tax, which is another barrier.

There are a number of affordable housing schemes available, like the successful Help to Buy equity loan scheme, but as the report highlighted most are aimed at first-time buyers and older homeowners aren’t currently given the same levels of help.

The report said there needs to be more focus on supplying suitable ‘affordable’ homes for last-time buyers, as well ‘retirement homes’ for those who need more assistance in their later years.

Mortgage recommendations

The study said mortgage lenders should make it easier to ‘port’ mortgages, meaning you keep the same deal when you move house. It should also be easier to switch from one type of mortgage to another and repay early without having to incur hefty early repayment charges.

It called for more people to talk about releasing housing wealth, which can be achieved through equity release, an industry that has grown in size and reputation in the past few years. There are also other options which should be considered, as more lenders are offering Retirement Interest-Only mortgages for over-55 year olds.

The study recommended for more insurance premiums to be made available to cover care costs in later life using housing wealth.

Summing all this up, the report admitted finding out what’s best for you can be complicated – and therefore recommended for people to take out affordable advice.


There’s a lot to take from the report, however the overriding message is clear: If the UK housing crisis is to be improved more focus needs to be put on last-time buyers.

For the government, introducing polices helping the demographic is perhaps less of an easy sell than with first-time buyers. After all, some older homeowners have benefitted from vastly increasing their housing wealth in the form of house price gains over the years.

Ultimately however, the report suggests that if older people are encouraged to move that could improve the state of the housing market for everyone, whether you’re a first-time buyer, a fourth-time buyer or a last-time buyer.

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