The report also highlights the role of the financial services industry in expanding mortgage offerings and insurance policies.
Housing policy should be refocused towards last-time buyers to encourage downsizing and ease the housing crisis, according to a new report for the Centre for the Study of Financial Innovation (CSFI).
The report, by Professor Les Mayhew of Cass Business School, also highlights the role of the financial services industry in expanding mortgage offerings and insurance policies to enable older people to monetise their housing wealth.
Research from Cass and Aldermore found that if there were still 2.48 people per dwelling, as in 1980, rather than today’s 2.36, the UK would have 1.3m more homes available.
However Mayhew found that the UK is not necessarily short of housing, but rather the right sort of housing. He says too many older people are stuck in houses that no longer suit them with a lack of affordable alternatives of suitable quality and size.
The report is urging the government to refocus policy on ‘last-time buyers’ to encourage downsizing, including via the planning system and tax incentives.
It also predicts that house prices will fall in the 2020s as ‘baby boomers’ start to pass their homes to the next generations.
Although this will alleviate some supply-side issues, the report says falling prices won't help those trying to get on the housing ladder now or who are stuck in homes that are too large.
Mayhew believes the role of financial services will be crucial to helping people monetise their housing wealth, not only within the growing market for equity release mortgages, but also surrounding greater flexibility in housing-backed lending to over 50s.
Les Mayhew, said: “The UK population is growing and also rapidly ageing thanks to improvements in life expectancy. By taking a long view, the research clearly shows the origins of today’s housing crisis and what can be done to tackle it. A better alignment of the housing stock with housing needs, along with improved financial incentives, would significantly alleviate housing pressures to the benefit of all.”
Sue Hayes, group managing director of retail finance at Aldermore, commented:“People in the UK are living longer, healthier lives, providing greater opportunity for their retirement compared with previous generations. This creates new challenges for the way they manage their finances in later life and for the housing market overall, although the financial sector is moving rapidly to meet their diverse demands. Product innovation has extended to later life mortgages, financial advice is improving and specialist lenders are playing a vital role by investing time to assess individual circumstances, with high levels of customer care.
“The report provides many practical and achievable recommendations on how the UK can expand the options for older homeowners and support their financial freedom. This will require changing mind-sets and a collective refocus from government and the housing industry towards helping last-time buyers. The effect could have a substantial impact in tackling the wider housing crisis.”
Article by Rozi Jones for www.financialreporter.co.uk