A new report from Barclays says ‘right-sizing’ could be an important part of the solution to the UK’s housing crisis – if properly incentivised.
Whilst the report acknowledges the government hopes 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 would could enable this to happen.
It 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 – or moving to a home with fewer bedrooms – could ease some of this impact.
Analysis from Barclays and Ipsos finds that an estimated 1.7m households are already open to right-sizing within the next one to two years. However, with the right policy interventions this could rise to as many as 3.8m estimated under-occupiers encouraged to right-size at some point in the future, freeing up much-needed ‘spare’ capacity.
These interventions, alongside the Government’s house-building plans, could offer a comparatively fast and cost-effective way to address the UK’s housing supply shortfall, says Barclays.
Nearly half (45%) of under-occupiers report cost as a key inhibitor to moving home, while “having a home that requires less maintenance” (39%) and “having a cheaper home” (26%) were top factors which would encourage them to move. Therefore, the creation of financial incentives and assistance would be the most powerful policy lever, with nearly four in 10 (38 per cent) under-occupiers saying this would make them likely to right-size.
Meanwhile, the complexity of the moving process is a major barrier for four in 10 (40%) under-occupiers, while 85% of both homeowners and under-occupiers agree that moving home is “always stressful”. This suggests that improvements to the buying and selling process could significantly impact perceptions of moving.
The report identifies the three under-occupier segments with the highest propensities to right-size: ‘Family-focused’, ‘Suitability Seekers’ and ‘Pragmatic Movers’.
Three-quarters (75%) of the most ‘movable’ segment, ‘Pragmatic Movers’, would consider right-sizing if a greater number of suitable properties were available. However, increasing housing supply alone will not be enough – more effective signposting is needed to drive awareness of new properties and their potential benefits.
‘Suitability Seekers’ would be particularly open to right-sizing if there was more accessible or age-friendly accommodation, with three quarters (73%) agreeing that this would make them more likely to move. However, confidence is a key barrier to moving for this group, with two-thirds (67%) saying more information and support available would make them likely to right-size.
To tackle some of the barriers to right-sizing and tap into existing motivations for movers, Barclays makes five recommendations to government and policymakers which, if implemented, could help unlock the spare capacity identified within the housing market:
- 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.
