The government may pay you to downsize

Older people may get financial incentives to downsize - will it work?

downsizing incentives

The government has announced plans to pay incentives to older people to persuade them to downsize into a smaller property. It could be a lifeline for the 3.4 million pensioners who want to move out of rambling and expensive family homes - to free up cash and cut the cost of maintaining their home.

There are plenty of older people who are ready to downsize. There are 1.1 million with one spare bedroom and 2.3 million with two or more spare bedrooms. Saga research shows that seven in ten over 50s would like to 'right size' in retirement to smaller homes or age-related developments. They are put off, however, by the cost of moving and the lack of suitable property.

See also: The great bungalow crisis: older people trapped in unsuitable homes

See also: The figures that could ruin your plans to downsize in retirement

See also: 'Bank of Gran and Grandad' in the red: Over 55s have withdrawn £17bn from their homes

What can they do?

The government wants to do something about the cost of moving, and is putting together a White Paper, outlining the incentives it will offer downsizers. There have been no leaks to suggest what's included in the document, but commentators point out that there are several options.

These includes schemes that are already run by some councils - providing help with moving costs, and financial advice for those who want to move. Alternatively, a report back in 2014 by think tank, Demos, proposed a stamp duty exemption on downsizing into properties worth up to £250,000, which would make a move more rewarding. This is something that Saga has argued for, for years.

The initiative has been applauded by Saga's director of communications, Paul Green. He commented: "If the Prime Minister can bring in measures to enable people to 'rightsize' in retirement this would be a true inter-generational solution to the housing crisis and would deliver on Mrs May's promise of helping young and old alike."

He adds: "Independent economists estimated this would prompt an extra 111,000 family homes would come onto the market; boost the building of homes suited to older generations; and, it could also boost the Government coffers due to an estimated £500 million in Stamp Duty from consequential house moves."

Where are the properties

It's a major step in the right direction, but this is only part of the solution, because the right kinds of homes need to be built too. Green highlights: "Britain needs a homes to be adapted or built to help older people live well in later life. Only 1% of Briton live in retirement developments, compared with 17% in the US and 13% in Australia."

In fact, according to Generation Stuck, a study by the International Longevity Centre and McCarthy & Stone last year, a third of people aged over 55 want to downsize at some point, but are hampered by a lack of suitable housing.

Older people don't just want properties that are easy to maintain, energy-efficient and accessible, they also want storage space, room for their hobbies, a spare room, a garden, and plenty of light. And developers aren't keen on building this sort of home, because they can make far more money by packing in high-density housing.

It doesn't help that so many government initiatives have been focusing attention on the first time buyer market. Initiatives like 'help to buy' mean developers have a vested interest in building for first time buyers.

We will have to wait and see whether the government can put together an attractive enough incentive package to convince developers it's worth building properties for older people. Perhaps this needs to include incentives for the developers themselves.

Otherwise it doesn't matter how much help the government gives older people in downsizing: if there's nowhere for them to go, they'll still have to rattle around in an unsuitable and expensive family home.

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