A new report from Barclays Property Insights, 'Right-sizing Revolution: unlocking untapped capacity in the housing market', finds that alongside building new homes, ‘right-sizing’ could be an important part of the solution to the UK’s complex housing crisis – if properly incentivised. Whilst the report acknowledges the steps being taken by government to solve supply issues through house-building, Barclays finds that extra capacity in the market could be released if under-occupiers were to right-size on a large scale, and recommends five policy changes which could enable this to happen.
The Barclays report notes that 85% of owner-occupied homes in England and Wales contain one or more ‘spare’ bedrooms and are therefore ‘under-occupied’. This constricts the availability of larger homes for families and younger buyers, causing a ripple effect throughout the housing market. 'Right-sizing', as Barclays call it – or moving to a home with fewer bedrooms – could ease some of this impact.
Analysis from Barclays and Ipsos finds that an estimated 1.7 million households are already open to right-sizing within the next 1-2 years. However, many homeowners are reluctant for various reasons, including the cost of moving, emotional attachment to their homes, finding suitable properties, and the difficulty of the buying and selling process. Barclays say that, with the right policy interventions, this could rise to as many as 3.8 million estimated under-occupiers encouraged to right-size at some point in the future, freeing up much-needed ‘spare’ capacity.
The five recommendations to government and policymakers are:
- Broaden perceptions of under-occupiers beyond just older people. In designing interventions to drive behaviour change, government should consider multiple under-occupier demographics, with the benefits to homeowners (rather than society) at the front and centre of policy design and communication.
- Implement targeted financial incentives. For example, grants, vouchers or the ability to offset moving costs against Stamp Duty – for individuals that choose to downsize.
- Help make home buying simpler and less stressful. Convene a joint working group – in partnership with industry – to explore and implement changes to improve the home buying and selling process. This would benefit all home movers, including right-sizers.
- Improve visibility of new housing. Raise awareness and consideration of right-sizing by encouraging local authorities to work closely with housebuilders, local media and key stakeholder groups to improve the signposting of new developments across the UK.
- Build more retirement and age-suitable housing. Reform the planning process by requiring local authorities to plan for this type of infrastructure, while also considering affordability issues.
Mark Arnold, head of mortgages and savings at Barclays, comments:
“Housing supply shortages are well documented and we fully support the Government’s ambitious house-building 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.”
