New research reveals that owning your own home does not always mean you can downsize in later life reports ELLIE O’DONNELL
“The housing market is failing to meet the needs of older persons,” declares Helen Collins, head of housing consultancy at Savills, which has found that over 300,000 home-owning households in the UK lack the equity to be able to downsize in the current market.
Whilst the open market offers vast number of choices for the 40 per cent of over 65s that can afford to downsize and still be left with extra cash to supplement their pensions, those with less equity have fewer options.
These people are more likely to remain in their homes unless illness or financial hardship force them into sheltered housing.
According to Savills, sheltered housing may be an option for some, but is not always attractive due to the ‘age and design of the accommodation’ on offer.
It is estimated that some 43 per cent of all housing equity in the UK is owned by the 65s, which amounts to some £1.5 trillion. However, this equity is unevenly distributed as several of the new-build retirement properties are priced so high that many can’t afford them.
One alternative is to part buy, part rent. Platinum Skies has launched Monterey (pictured above), a development of 34 one-and-two bedroom apartments in Christchurch, Dorset costing £140,000 for a 50 per cent share of a one bedroom.
David Hines, Chief Executive says, “We believe all retirees deserve a high-qualify lifetime home. Our unique approach to retirement make owning a home at Monterey truly affordable: low home purchase price, low costs and no hidden charges.”
Monterey is set within the grounds of Christchurch hospital, walking distance from the town centre and near the Dorset coast.
Properties are sold on 125-year leases with £500 a year ground rent – reviewed every 15 years. Rent is three per cent of outstanding value. Maintenance charges for one-bed are £1,700 a year and £2,180 for a two bed.
The criteria for eligibility is that you have to own only one home and earning less than £80,000 a year.
There is currently some 560,000 sheltered homes available for older people to rent for a demand of 420,000. The reason for this oversupply is because the housing options are either unsuitable or not in areas people want to live in. Most older people prefer to move near their existing home, close to friends and family.
But in many markets demand outstrips supply such as the New Forest, Sheffield and St Albans. This is because in urban cities such as Birmingham and Leeds, demographic changes have seen older residents move away to larger homes in the countryside.
The Savills’ research concludes that social landlords could resolve retirement housing issues by using a method already being used in over 180,000 of working-age households: shared ownership.
Savills believes that shared ownership has the potential to offer more attractive opportunities for the over 65 home-owning households.
Helen Collins argues, “Housing associations have the experience and capacity to develop new retirement housing options to meet the needs of those who don’t have the equity to downsize in the open market.”
The results will not only be beneficial for the over 65s as she adds, “A new retirement-living shared-ownership product could be a way to meet needs and free up much needed family housing”.
Savills found that in Leeds, Glasgow City and Wiltshire there are over 4,000 over 65-year-old households that could afford to downsize and buy a shared-ownership home but not a traditional home outright.
