The report, Right-sizing Revolution: unlocking untapped capacity in the housing market, investigated the motivations of and barriers to right-sizing.
An increased level of right-sizing, which is defined as moving to a home with fewer bedrooms, could ease the constricted housing market, as the report noted that 85% of owner-occupied homes in England and Wales have one spare bedroom or more and are therefore classed as under-occupied. This affects the availability of larger homes for younger buyers.
Barclays estimated that right-sizing could therefore be a significant step in resolving the UK’s housing crisis if it is properly incentivised. The bank made five recommendations to the government and policymakers that could incentivise large-scale right-sizing.
Analysis from Barclays and Ipsos found that an estimated 1.7 million households are open to right-sizing in the next one to two years. With the right policy interventions, this could increase to 3.8 million at some point in the future, which would free up spare capacity for the rest of the housing market and address the country’s housing supply shortfall.
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Understanding under-occupier demographics
Some 61% of under-occupiers – people living in properties with surplus bedrooms – said they feel an emotional attachment to their current home because of the effort they put into the property and the memories created there. Only 20% said they think people should right-size to free up homes for others, which the report stated evidenced that strong and targeted incentives are needed.
The report also found that the cohort of under-occupiers were not just later life homeowners – 36% of under-occupiers are aged 45-64 years old, highlighting that right-sizing is potentially applicable to a wider demographic, meaning the incentives will have to be widespread too.
Motivating homemovers
One of the principal barriers to right-sizing is how complex the moving process is – the report found that 40% of under-occupiers reported this as a major barrier, and 85% of homeowners and under-occupiers alike said that moving home is “always stressful”.
Improvements to the buying and selling process may therefore have a positive impact on the overall perception of the process and perhaps induce more potential movers and last-time buyers to right-size.
Almost half, 45%, of under-occupiers reported cost as a key barrier to moving home. Having a home that requires less maintenance and having a cheaper home were the top factors that would encourage a move, cited by 39% and 26% of respondents respectively.
This indicates that financial incentives and assistance would be the most powerful tool in the push for right-sizing, with 38% of under-occupiers saying this would make them likely to right-size.
Housing supply
Barclays’ report identified three under-occupier segments with the largest propensity to right-size: the ‘family-focused’, ‘suitability seekers’ and ‘pragmatic movers’. The report found that three-quarters of the most movable segment, the ‘pragmatic movers’, would consider right-sizing if more properties that are suitable were available.
The ‘suitability seekers’ would consider right-sizing if there was a greater quantity of accessible or age-friendly accommodation, with 73% agreeing this would make them more likely to move. However, 67% of this group said that more information and support available would make them likely to right-size.
Barclays’ recommendations for right-sizing
In light of the report’s findings, Barclays collated five recommendations for the government and policymakers.
- Broaden perceptions of under-occupiers beyond just older people. The government should consider multiple under-occupier demographics when devising interventions to drive behavioural change. The benefits to homeowners, as opposed to society, should be at the heart of the policy design and the focal point of communication about it.
- Implement targeted financial incentives. These could include vouchers, grants, or the ability to offset moving costs against stamp duty for those choosing to downsize.
- Help make home buying simpler and less stressful. Convene a joint working group, in partnership with the industry, to explore and execute changes to improve the property buying and selling process, thereby benefitting all homemovers, not just right-sizers.
- Improve visibility of new housing. Raise awareness and consideration of right-sizing by encouraging local authorities to work closely with housebuilders, key stakeholders and local media to improve the signposting of new developments across the country.
- Build more retirement and age-suitable housing. This would involve reforming the planning process by requiring local authorities to plan for this type of infrastructure while also considering affordability issues.
‘More holistic strategy is needed’
Mark Arnold, head of mortgages and savings at Barclays, said: “Housing supply shortages are well-documented and we fully support the government’s ambitious house-building plans. However, a stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market, including the challenges faced [on] the demand side.
“Our public policy recommendations could help to support those people who are not currently seeking to move to right-size into accommodation that suits their needs and saves them money, whilst unlocking crucial capacity within the housing supply chain.”
David Thomas, chief executive at Barratt Developments, said: “The Barclays report highlights potential barriers to the diverse group of people who may benefit from moving to a more manageable home that is cheaper to run and continues to meet their needs.
“If some of those barriers are removed, housebuilders and local authorities can work together to increase the supply of energy-efficient new homes located with easy access to amenities and community facilities to help people find their right home and help free up larger homes for growing families.”
