Legal & General Chief: Pensioners Are Stuck In Oversized Properties Worth £820Bn

[Flopsy]

The flat I am currently living in is for sale (LL has been trying to sell for a long time but won't budge on the price).

We are allowing some buyers to visit (at strictly limited times to suit us as we are looking to move) and don't fancy a retaliatory eviction just yet.....

Are getting mainly old people downsizing but they all say it is too small for them. The other problem with a few who have been interested is eventually they discover that they cannot sell their large homes at the prices EA's have told them they are "worth" and they will not consider lowering the prices so we have a stalemate.

We are the ones who are stuck. Would buy this flat if we could but the LL doesn't need to sell. He's over 60.

Edited June 1, 2015 by Flopsy

[billybong]

Very true. Governments want people to live alone, pay for all help they need, so they can skim tax each step of the way. Pay someone to look after your children, pay tax in the process, move house as often as possible, pay stamp duty, pay others to do DIY, pay tax in the process, encourage all parents to work and let their children be brought up by others, so they can pay more tax and be bigger "consumers". Everything about modern governments is wrong.

+1

[Errol]

Clearly the way around this is for the Government to create a 'Help to sell' scheme. The Government would pay to buy the pensioner's house at full value.

Clearly it would be completely wrong to allow the market and total lack of buyers to gradually force prices down.

Edited June 1, 2015 by Errol

[onlyme2]

So why is London such a 'special' place to live?.....

A fiat money / more recently a QE based fake economy together with elevated salaries that that has provided.

[janch]

When I was growing up we lived in a detached house with plenty of space around it and quiet roads to cycle in. When I go back there (Berkshire) the estate of 3/4bed houses (mainly detached) is quiet as the grave as either the original occupants are still there (in their 80s by now) or people are out at work. There are no children riding their bikes or playing in the large gardens. The families with children can no way afford these family homes and instead probably live in much more cramped conditions. This is quite simply wrong. Oldies in their 80s are more often unable to maintain large family houses and need a gardener/cleaner etc plus they put in a stair lift if they can't manage the stairs. They are family homes and should be used as such.

I agree most people find it hard to give up a house they have lived in for years and which has happy memories but what about the next generation? I think it's really selfish to house-block in this way. Apart from monetary incentives to move perhaps there should be schemes to help people cope with the whole moving process which is complicated and if you haven't moved for years will be a stumbling block for a lot of people especially for recently bereaved widows/widowers. The other thing putting people off the hassle of a move is downsizing all their "stuff" accumulated over the years.

There definitely needs to be a spotlight put on this though as older pensioners downsizing/rightsizing would free up a lot of the housing stock and maybe bring prices down a bit too if the supply is increased.

[Noallegiance]

Understood the point of view but one problem is that last-time and first-time buyers only have one very limiting option - move to an overpriced shoebox.

I can understand staying put from both ends of the spectrum.

[Si1]

When I was growing up we lived in a detached house with plenty of space around it and quiet roads to cycle in. When I go back there (Berkshire) the estate of 3/4bed houses (mainly detached) is quiet as the grave as either the original occupants are still there (in their 80s by now) or people are out at work. There are no children riding their bikes or playing in the large gardens. The families with children can no way afford these family homes and instead probably live in much more cramped conditions. This is quite simply wrong. Oldies in their 80s are more often unable to maintain large family houses and need a gardener/cleaner etc plus they put in a stair lift if they can't manage the stairs. They are family homes and should be used as such.

I agree most people find it hard to give up a house they have lived in for years and which has happy memories but what about the next generation? I think it's really selfish to house-block in this way. Apart from monetary incentives to move perhaps there should be schemes to help people cope with the whole moving process which is complicated and if you haven't moved for years will be a stumbling block for a lot of people especially for recently bereaved widows/widowers. The other thing putting people off the hassle of a move is downsizing all their "stuff" accumulated over the years.

There definitely needs to be a spotlight put on this though as older pensioners downsizing/rightsizing would free up a lot of the housing stock and maybe bring prices down a bit too if the supply is increased.

I don't believe there's any deliberate individual bed blocking, rather screwed up practical and financial incentives

[iamnumerate]

I am surprised no one has mentioned stamp duty, something that discourages downsizing as you lose some of the benefits and means you can never change your mind (unless you have loads of cash, in which case why downsize?).

[winkie]

When I was growing up we lived in a detached house with plenty of space around it and quiet roads to cycle in. When I go back there (Berkshire) the estate of 3/4bed houses (mainly detached) is quiet as the grave as either the original occupants are still there (in their 80s by now) or people are out at work. There are no children riding their bikes or playing in the large gardens. The families with children can no way afford these family homes and instead probably live in much more cramped conditions. This is quite simply wrong. Oldies in their 80s are more often unable to maintain large family houses and need a gardener/cleaner etc plus they put in a stair lift if they can't manage the stairs. They are family homes and should be used as such.

I agree most people find it hard to give up a house they have lived in for years and which has happy memories but what about the next generation? I think it's really selfish to house-block in this way. Apart from monetary incentives to move perhaps there should be schemes to help people cope with the whole moving process which is complicated and if you haven't moved for years will be a stumbling block for a lot of people especially for recently bereaved widows/widowers. The other thing putting people off the hassle of a move is downsizing all their "stuff" accumulated over the years.

There definitely needs to be a spotlight put on this though as older pensioners downsizing/rightsizing would free up a lot of the housing stock and maybe bring prices down a bit too if the supply is increased.

Instead of blaming the people.....put your energies into blaming the system that got us where are at.......a system that promotes homes as investments including foreign investors, instead of homes for working local people who for most part couldn't care what value it is.

[Flopsy]

I went to a meeting organised by Priced Out in London a few years ago with some Labour MPs (shows how long ago it was as they were still in power).

When we asked why so many 1 and 2 bedroom new build flats were being built the MP's replied that given how many single divorced and single/married pensioners were expected they encouraged the small flats being built as they expected this group to buy them.

They thought that pensioners would downsize into a small flat. I have seen some developments dedicated to older people in Surrey and these did sell well but not in huge numbers. As far as I am aware BTL'er didn't buy these.

The people stuck in the 1 and 2 bedroom flats built for the masses are single young people, groups or couples renting off BTL'ers now. At least in London and the SE where I tried to buy.

Edited June 1, 2015 by Flopsy

[mmt]

Clearly the way around this is for the Government to create a 'Help to sell' scheme. The Government would pay to buy the pensioner's house at full value.

Clearly it would be completely wrong to allow the market and total lack of buyers to gradually force prices down.

After all, they worked hard and contributed all their lives, so clearly not allowing the market to set prices will be "the right thing do". We can't allow the market to take away their hard-earned unearned equity.

[Bland Unsight]

Hopefully not being excessively cynical, but I read this as L&G trying to sell equity release products. They are beginning by reminding income strapped pensioners with sod-off great houses how much those houses are 'worth'. They point out that it's going to be basically impossible for the people that they need to sell the houses to in order to achieve those price to be able to pay those prices, (classic bubble logic). They point out to the pensioners that they don't want to have to live in nasty little slave boxes that they'll have to 'rightsize' (delightful neologism) into. What a mess, except...

No problem L&G to the rescue.

If older home owners want to stay in their existing homes, they can still unlock unproductive housing wealth through equity release. There is a strong economic case for continued industry, government and regulatory efforts to develop this market. Total lending through equity release products in 2013 was £1.07bn – a record – but still a drop in the ocean given its £5bn potential. Legal & General is committed to growing the equity release market.

As many of us move into older age, and the number of “the oldest old” grows exponentially, the issue of appropriate housing for those aged 55 and over affects a large section of society. Our current housing stock is unproductive. Expanding housing supply, productivity and diversity for older people can help ensure that everyone can enjoy independence, dignity and a high quality of life over the whole of our lives.

This is why we need a whole-chain view of the housing market, a National Plan for high-quality older peoples’ housing that complements the efforts being made for the first-time buyers.

Source: It's not just first time buyers who need help in today's housing market, By Nigel Wilson, Chief executive, Legal & General, (Telegraph today as accompanying piece to the article in the OP, emphasis added.)

Democorruptcy was making a good call on this literally years ago. Wave of the future, dude.

[canbuywontbuy]

When we asked why so many 1 and 2 bedroom new build flats were being built the MP's replied that given how many single divorced and single/married pensioners were expected they encouraged the small flats being built as they expected this group to buy them.

And no doubt they encourage divorces too, to ensure we are all individually as needy as possible. Two people looking after each other will expend less energy and money than two separate people will. Governments love divorce and hate sharing. The economy is the most important thing.

Edited June 1, 2015 by canbuywontbuy

[Guillotine]

Nigel Wilson has a reputation as an asset stripper. At L&G he is shutting offices and casting off jobs whilst he and his cronies pocket millions.

He has purchased a house builder Cala so that he can build homes to then rent out. He has a very aggrewsive strategy to concrete over the sputheast of england.He is very nuch in the ilk of fred the shred.

[olde guto]

I have never seen why living in a multi generational household was seen as some how second class. Successful cultures and our Asian friends being a good example do it all the time and it has nothing to do with income level.

Pretty sure East Europeans are far more likely to do that as well (maybe it's a more natural arrangement, parents work, grandparents help look after the kids).

They're also prepared to live in far more cramped conditions, someone who lived in a 1 bed communist era flat will be quite happy living in a UK 1 bed flat with one or two children. The kids would share the bedroom and the parents sleep in the living room (with a decent sofa bed it can be both). I wonder how many Brits would be happy to do something like this, or rather I should say happy about their "friends" etc. finding out they live like this?

Edited June 1, 2015 by olde guto

[Ash4781]

What are they selling ? Equity release product ?

[billybong]

And no doubt they encourage divorces too, to ensure we are all individually as needy as possible. Two people looking after each other will expend less energy and money than two separate people will. Governments love divorce and hate sharing. The economy is the most important thing.

+1

The expression "two can live as cheaply as one" used to be a well worn one.

Anathema to UK politicians in modern times.

Then there's the monetisation of the dating scene etc to consider - what would they do without the taxes from such organisations.

Edited June 1, 2015 by billybong

[stormymonday_2011]

I went to a meeting organised by Priced Out in London a few years ago with some Labour MPs (shows how long ago it was as they were still in power).

When we asked why so many 1 and 2 bedroom new build flats were being built the MP's replied that given how many single divorced and single/married pensioners were expected they encouraged the small flats being built as they expected this group to buy them.

They thought that pensioners would downsize into a small flat. I have seen some developments dedicated to older people in Surrey and these did sell well but not in huge numbers. As far as I am aware BTL'er didn't buy these.

The people stuck in the 1 and 2 bedroom flats built for the masses are single young people, groups or couples renting off BTL'ers now. At least in London and the SE where I tried to buy.

According to my wife who is a local councillor one bed room flats aimed at pensioners are the hardest to shift because most downsizers want two bedrooms as a minimum so they can have their kids or grand kids stay over. Quite a few married pensioners also sleep apart for a variety of reasons including health issues. Given the choice of staying put in their current home or moving into a smaller property most opt for the former. In addition the costs involved in downsizing are quite high and the financial gains are often not what they are cracked up to be.

[olliegog]

also downsizers into flats are put off by:

excessive charges (can be £2k a year)

no garden to potter in (balcony if they are luckY) and 'communal grounds' are not the same

if they opt for a small house/bungalow instead - there is often not much financial advantage (have you seen the price of 2 bed bungalows in 'bungalow land' estates? )

what 'older' people want is an easy to manage home and garden in a nice quiet area with health centre /shops near to hand and at least 2 bedrooms (one for visitors)

[BalancedBear]

When I was growing up we lived in a detached house with plenty of space around it and quiet roads to cycle in. When I go back there (Berkshire) the estate of 3/4bed houses (mainly detached) is quiet as the grave as either the original occupants are still there (in their 80s by now) or people are out at work. There are no children riding their bikes or playing in the large gardens. The families with children can no way afford these family homes and instead probably live in much more cramped conditions. This is quite simply wrong. Oldies in their 80s are more often unable to maintain large family houses and need a gardener/cleaner etc plus they put in a stair lift if they can't manage the stairs. They are family homes and should be used as such.

I agree most people find it hard to give up a house they have lived in for years and which has happy memories but what about the next generation? I think it's really selfish to house-block in this way. Apart from monetary incentives to move perhaps there should be schemes to help people cope with the whole moving process which is complicated and if you haven't moved for years will be a stumbling block for a lot of people especially for recently bereaved widows/widowers. The other thing putting people off the hassle of a move is downsizing all their "stuff" accumulated over the years.

There definitely needs to be a spotlight put on this though as older pensioners downsizing/rightsizing would free up a lot of the housing stock and maybe bring prices down a bit too if the supply is increased.

Perhaps too many small houses and flats have been built, and not enough family homes? One day these houses will become available anyway, but if people live longer and want to live in them, we need more of them.

[olde guto]

According to my wife who is a local councillor one bed room flats aimed at pensioners are the hardest to shift because most downsizers want two bedrooms as a minimum so they can have their kids or grand kids stay over. Quite a few married pensioners also sleep apart for a variety of reasons including health issues. Given the choice of staying put in their current home or moving into a smaller property most opt for the former. In addition the costs involved in downsizing are quite high and the financial gains are often not what they are cracked up to be.

I've said it here before but bungalows just aren't being built now, the newest bungalows I've seen were all built in the 90's. Not all pensioners want to live in flats especially if they've been used to having their own garden etc. If anything more should have been built to cope with an ageing population not fewer.

[winkie]

What some do is buy a small bolt hole in UK and rent in Spain or France taking their savings and pensions with them.....rents are low and long-term tenants who pay their rent have more security and protection and the pensioners can make use of the respective health services.

Edit: also Portugal....just found this.

http://nonhabitualresidents.com/#intro

Edited June 1, 2015 by winkie

[19 year mortgage 8itch]

If you can afford the house you are living in and like the area why would you put yourself through the hassle of moving?

My parents could move but they've spent 35 years in their current house and are within walking distance of a shop, pub, their church and their friends.

You only give that up if you have to.

What you mean is that people are selfish and some people are more selfish than others.

Why should anyone do anything that isn't beneficial to themselves?

[19 year mortgage 8itch]

schools are back today, and I can give you an anecdote from my local area (LDN zone 4)......school catchment zones are going to become very interesting in the near future. Most "houses" around any school seem to be occupied by those who have grown-up children now still living at home. You can tell by the numbers of cars outside the house as time moves on. And the absolute increase in traffic compared to Friday last week shows me that most kids are being driven in...this form a school with a 1mile catchment area. Nothing within 1 mile is obtainable by the average little couple with a freshly minted 5yo child.

20 years ago you could buy that house at a massive stretch (and they did) and the child went to the school and life was good. But no young couple can touch that house now. Will the school have to move? (haha), will catchment zones be a thing of the past? Will these people, of increasing age, start moaning more as the years roll on, with the inability to have a quiet morning cuppa due to traffic/kids?

Maybe we can have HTS (Help to Stay) whereby they can rent their address as a virtual residence, with mail forwarding, so that children can get access to the school without technically living in the catchment area? (oh wait, that already happen, we just must not talk about it very loud..taboo).

I like your posts.

[stormymonday_2011]

What some do is buy a small bolt hole in UK and rent in Spain or France taking their savings and pensions with them.....rents are low and long-term tenants who pay their rent have more security and protection and the pensioners can make use of the respective health services.

Edit: also Portugal....just found this.

http://nonhabitualresidents.com/#intro

That has always been the smart option rather than selling up in the UK and punting on a foreign house purchase. However, it still requires more capital and income than most pensioners possess, and even small bolt holes in some parts of the UK are eye wateringly expensive, particularly when moving costs, maintenance charges etc come into play. Perversely the excessive cost of housing in the UK works against mobility in the market as many people simply balk at the prospects of handing over huge wedges of cash to the parasites (private and state) who want to take a big cut of any higher value property sale or purchase. It is these latter groups who have the biggest vested interest in HPI as their rake off increases as prices go up. Obviously, they would benefit from more churn which is why the government is so keen to kick the FTB market into life via taxpayer payouts. Nonetheless, the last few years suggest they can live with low volume just as long as prices keep going up.

It is worth bearing in mind that in periods of HPI it is usually the flats at the bottom of the market that get most over valued and that are likely to be the hardest to shift in a housing bust. The best time to down size from a bigger to a smaller property is actually in a HPC particularly if you are buying a flat since that is the time the differential between houses and flats is most marked . Anyone who had the misfortune to own a small flat during the early 1990s HPC will know they were particularly hard to sell. I would imagine there are some potential downsizers who got burnt then who are very wary of going back into buying that class of property particularly when prices look overcooked. I think some pensioners would consider selling up and renting if they could find suitable property with some security of tenure. The problem is that law governing the private rental sector in the UK is skewed in favour of the worst type of private landlords and the government seems determined to f*ck over the public and HA sector as part of their never-ending campaign to build the most dysfunctional housing sector possible.

Edited June 1, 2015 by stormymonday_2011