Speaking at the Later Life Lending Summit in London, hosted by the Equity Release Council, James Daley, managing director of Fairer Finance, said there have been discussions going back at least 20 years on how to help more of the population access financial support and guidance, but he didn’t think “we have quite solved the problem yet”.
It comes after Fairer Finance released a report that estimated that around half of UK households would need housing wealth to support later life living.
“We don’t have enough touch points where we can help consumers think about their pensions, about their protection, and so that’s why we’ve talked explicitly about mortgage advisers playing a big part, because mortgages are a moment when people will be thinking about their finances as they’re in later life.
“But employers probably need to start playing a bigger role to have conversations with their employees about retirement saving and protection, and we’ve talked about mid-life MOTs,” Daley said.
He praised Aviva and Age UK’s proposal for mid-life retirement MOTs, which would offer pensioners guidance and support while they are in retirement and would act as a financial and lifestyle review covering a range of topics.
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“We need to find new touch points to start having these conversations with consumers, because otherwise, if we just make the information available and wait for them to access it, then it’ll be too late and that conversation will happen at retirement – by which time, their options are suddenly much more limited than if they spoke about [it]… 10 years earlier,” Daley said.
Demand and supply issues barriers to downsizing
John Godfrey at TheCityUK said there was a need to “join some of those dots across pensions, across housing, across social care and across the benefit system”, but the “obvious place to start with is in the housing market”.
He explained that there are demand and supply problems, one being that people are not being persuaded to “rightsize” as they get older.
Godfrey explained that as a downsizer, you are competing for the same properties as people who are moving up the ladder.
He said one option, as suggested in the Fairer Finance report, could be to lower stamp duty for downsizers, but there could be “pushback” from first-time buyers who feel they are “being disadvantaged”.
“The right solution, I think it may be to address stamp duty, but it’s also just to address the quality and choice of housing available on the market, and there simply isn’t enough,” he said.
Godfrey said when he was working in the West Midlands, he saw around 100 different housing applications that involved between six and 7,000 homes in total and only one project was specifically later life living for around 80 homes.
“It’s partly because councils, who are responsible for planning, feel that they will get more council tax receipts from a younger population that’s in work than a retired population, which may bring costs to them.
“That’s wrong, actually, but that’s what they think. It may also be, because for the builders, and particularly the volume housebuilders, the place to make money has been either with the first-time buyer, when Help to Buy was around, or with the three-, four-bed homes for those moving up the ladder.
“There does need to be some kind of fiscal adjustment to make this more attractive. With that supply, I think, will come demand if we tell people about the merits of living in a more energy-efficient, easier-to-maintain or accessible type of home,” Godfrey continued.
Daley said the “principle here is about removing barriers and incentivising people to consider downsizing”.
“At the moment, taxation is one of the barriers, and we hope… that by facilitating more people leaving their family homes, you then create more mobility further down the housing level.
“Tax receipts could be getting in the way, but this [proposed cut] doesn’t have to be a permanent thing, but in the in the short to medium term, as we start to bring down these barriers, we want to encourage people to downsize and make it as cheap as possible, but the starting point has to be having suitable housing scope for them to downsize into,” he explained.
Daley noted that “having the right conversations with consumers is one of the biggest challenges” with downsizing.
