Britain needs to stop building the wrong sort of homes

I’ll be writing about Help to Buy and the housing bubble (is it or isn’t it?) again in this week’s Moneyweek (subscribers can read this on Friday – and if you’re not a subscriber, you can get your first three copies free here). But it is worth noting when people talk about the supply of housing in the UK being insufficient, that the supply problem is not so much the number of houses, as the wrong houses.

A report from Demos points out that with housing (as with a good many other things) there is often too much focus on what the young are up to, and not enough on what the old are after. So while those at the bottom struggle to get on the ladder, those at the top “are often trapped in homes that are too big and unmanageable,” thanks to a lack of suitable housing for the old.

Lack of good retirement housing isn’t the only reason that huge percentage of the family homes in the UK are lived in by single retired people rather than by families, but it is hard to argue that it doesn’t contribute.

One in four of the over 60s say that they would be interested in buying a specially designed retirement property. Extrapolate that nationwide and you get 3.5 million people. Yet there are only just over half a million retirement properties in the UK – mostly already being lived in.

Ask a few more questions about how many over 60s want to downsize and how many of those own their houses outright, and you get quite a conclusion: the over 60s who want to downsize if possible “are sitting on £400 billion of housing wealth”. If just half of all the people who want to downsize or more into retirement properties followed through, well over £300bn worth of mainly family sized property would be released on to the market – something in the region of two million three bedroom houses.

None of these numbers are precise – who knows how many people really want to move and how many just think they do? But the key point is that the government really needs to work with a ‘whole of chain’ approach.

Focusing less on doing all they can to subsidise first time buyers into new build ‘family housing’ – or for that matter the 2-bed urban flats that would really suit most elderly people pretty well  –  and more on creating the retirement properties that might free up existing family home might be something to think about.