It’s time to sell off your home, pensioners told
Financial watchdog says elderly must downsize
OLDER homeowners who ‘sit quite happily in a very big house’ should be given more encouragement to sell up and downsize, it was claimed yesterday.
Ministers should look at ways to tackle the problem of retired people living in properties that are too big for them, says a major financial watchdog.
A senior official risked the wrath of millions of mortgagefree pensioners who remain in family homes when she said they may need to be steered towards moving to retirement housing.
Lynda Blackwell, head of mortgages at the Financial Conduct Authority, said Britain had a ‘real issue with the last-time buyer’. But her comments were described as ‘ insulting’ and ‘unhelpful’ last night.
Critics said older property owners should not be seen as ‘home blockers’.
Mrs Blackwell suggested ministers might be too preoccupied with helping first-time buyers rather than tackling blockages at the top end of the market.
‘We’ve got a big supply issue in this country,’ she said.
‘ There’s l ots of questions about whether it is right that the Government should focus on the first-time buyer when we’ve got a real issue with the last-time buyer.
‘There’s older borrowers who basically pay off their mortgage and sit quite happily in a very big house. Does there need to be thought given to trying to encourage older persons to actually move away – build proper housing for retired people in the right places?’ she asked at a conference hosted by the Intermediary Mortgage Lenders Association.
‘There is a debate to be had about whether the Government’s focus is actually in the right place.’
However, Lisa Harris, of over50s specialists Saga, said: ‘In the UK we really do face a housing crisis.
‘However, setting the generations against each other or talking about “tackling older homeowners” is not just unhelpful, it’s insulting.
‘Older homeowners are not “home blockers”. They are people who have worked hard all their lives to live in the homes they love.’
Saga said its research showed two thirds of older homeowners would like to consider moving home in retirement but are unable to do so – either because there are not enough appropriate properties to move to, or because the costs to move far outweigh any benefit.
Mrs Harris said: ‘We need to consider i ncentives to help encourage those that would like to move, to take that step.
‘We believe that allowing older homeowners one stamp duty free move if they are downsizing ready for retirement might help stimulate the market.’
Mrs Blackwell’s comments were made during a debate on the chronic housing shortage in the UK. Only last week the Council of Mortgage Lenders said pensioners are blocking the property ladder because there was little incentive for them to downsize after their children leave home. CML chairman Moray McDonald said that, last year, only 1 per cent of the UK’s 5million homeowners over 65 moved house.
‘That doesn’t really look terribly healthy,’ he said.
‘It literally means those homes are not released for families or indeed for redevelopment for the kinds of housing those older people would like to live in.
‘It also massively blocks the passing of family capital to younger generations, which we know would enable more people to buy sooner, put a bigger deposit down, pay a lower rate on their borrowings.
‘So it bears on younger borrowers massively.’
Campaigners have long called for the Government to axe stamp duty for pensioners who agree to downsize.
But Age UK has warned that older people should not be branded ‘house blockers’ or feel pressured to sell their family home.
Paula Higgins, of the Home-Owners Alliance, said many older homeowners want to downsize but there are not enough suitable homes on the market.
She said: ‘There is a problem for older people in their big houses because there isn’t anything for them to move into if they sell.
‘There is a lack of supply and the Government isn’t doing much about it. They are going to have to find a radical solution because the situation is going to get worse and worse.’
Yesterday, the FCA said banks needed to find new ways to lend to Britain’s ageing population beyond retirement.
Mrs Blackwell said the industry was exploring a ‘ hybrid’ model where borrowers could repay their loan until a certain age, when it would then become a lifetime mortgage, with the outstanding debt repaid upon their death.
She said: ‘ A mortgage was designed to be paid off before you retired, or, for older borrowers who had a lot of equity in their house, lifetime mortgages were created so you had equity released.
‘There is nothing in between and that’s what the industry is looking at the moment.’
‘Help stimulate the market’