Right-Sizing: A Key Strategy to Address the UK's Housing Crisis
A new report from Barclays highlights the importance of right-sizing in solving the UK's complex housing crisis, especially when combined with government efforts to increase housing supply.
RightsizingHousing CrisisUnderoccupied HomesPolicy ChangesFinancial IncentivesReal Estate NewsOct 14, 2024
Barclays' report reveals that 85% of owner-occupied homes in England and Wales have one or more spare bedrooms, making them under-occupied. This situation limits the availability of larger homes for families and younger buyers, creating a ripple effect throughout the housing market. Right-sizing, which involves moving to a home with fewer bedrooms, could significantly alleviate this issue.
According to the analysis from Barclays and Ipsos, about 1.7 million households are already open to right-sizing within the next 1-2 years. With the right policy interventions, this number could increase to as many as 3.8 million households in the future, providing a fast and cost-effective solution to the housing supply shortfall. These interventions, combined with the government's ambitious house-building plans, could offer a comprehensive approach to addressing the housing crisis.
The decision to move is highly personal and often grounded in emotion, mindset, and perceptions of personal benefit. For instance, 61% of under-occupiers feel an emotional attachment to their current home due to memories and the effort they have invested in it. Therefore, only 20% of under-occupiers believe that people should right-size to free up homes for others, highlighting the need for strong, targeted incentives to encourage action.
The under-occupier market is more diverse than often assumed, with a broad range of homeowners having spare capacity in their homes. While 'last time buyers' form a significant segment of potential right-sizers, more than a third of under-occupiers are aged between 45-64 years old. This diversity means that incentives need to be tailored to a wide range of consumer demographics.
Cost is a significant barrier for nearly half (45%) of under-occupiers, while factors such as having a home that requires less maintenance (39%) and a cheaper home (26%) are top motivators for moving. Financial incentives and assistance are crucial, with nearly four in 10 (38%) under-occupiers saying that such incentives would make them more likely to right-size.
The complexity of the moving process is another major barrier, affecting four in 10 (40%) under-occupiers. Additionally, 85% of both homeowners and under-occupiers agree that moving home is always stressful. Simplifying the buying and selling process could significantly impact perceptions of moving.
The availability of suitable properties is crucial for those considering right-sizing. The report identifies three under-occupier segments with the highest propensities to right-size 'Family-focused', 'Suitability Seekers', and 'Pragmatic Movers'. Three-quarters (75%) of 'Pragmatic Movers' would consider right-sizing if more suitable properties were available. However, increasing housing supply alone is not enough; more effective signposting is needed to raise awareness of new properties and their potential benefits.
'Suitability Seekers' are particularly open to right-sizing if there is more accessible or age-friendly accommodation, with 73% agreeing that this would make them more likely to move. Confidence is a key barrier for this group, with 67% saying that more information and support would make them likely to right-size.
To tackle the barriers to right-sizing and tap into existing motivations, Barclays recommends five policy changes
1. Broaden perceptions of under-occupiers beyond just older people. Government interventions should consider multiple under-occupier demographics, emphasizing the benefits to homeowners rather than society.\n2. Implement targeted financial incentives, such as grants, vouchers, or the ability to offset moving costs against Stamp Duty for individuals choosing to downsize.\n3. Simplify the buying and selling process to reduce stress and complexity.\n4. Increase the availability of suitable properties and provide effective signposting to raise awareness.\n5. Offer more information and support to increase confidence and reduce uncertainty among under-occupiers.
By addressing these barriers and implementing the recommended policies, the UK could see a significant increase in right-sizing, contributing to a more balanced and efficient housing market.
Frequently Asked Questions
What is right-sizing in the context of the UK housing market?
Right-sizing involves moving to a home with fewer bedrooms to free up larger homes for families and younger buyers, thereby addressing the housing supply shortfall.
Why is right-sizing important for solving the UK's housing crisis?
Right-sizing can help free up much-needed capacity in the housing market, making it easier for families and younger buyers to find suitable homes, which is crucial for addressing the housing crisis.
What are the main barriers to right-sizing for under-occupiers?
The main barriers include emotional attachment to current homes, cost, the complexity of the moving process, and the need for more suitable properties and information support.
What policy changes does Barclays recommend to encourage right-sizing?
Barclays recommends broadening perceptions of under-occupiers, implementing targeted financial incentives, simplifying the buying and selling process, increasing the availability of suitable properties, and offering more information and support.
How can financial incentives help with right-sizing?
Financial incentives such as grants, vouchers, or the ability to offset moving costs against Stamp Duty can make right-sizing more attractive and cost-effective for under-occupiers, thereby increasing the likelihood of them moving to smaller homes.
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