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Nearly 200,000 annual movers are ‘last-time buyers’, IMLA reports

Over-55s now make up nearly 200,000 owner occupier housing transactions in England each year, according to the latest study from the Intermediary Mortgage Lenders Association (IMLA).

The report – titled ‘Last Time Buyers: the challenges and opportunities for 55+ homeowners wanting to move’ – assessed the growing trend of older homeowners predominantly using cash to move from their established family home.

It found that the figure roughly doubled over the past decade as a growing number used their huge equity reserves to find their perfect last home.

The report notes only around 2.5% of the eight million older homeowners in England move each year. But it predicts that as the group of over-55s grow faster than other generations, more people will seek to make one final housing transaction.

Cash is king for over-55s

According to estimates, property turnover has halved over the past 25 years and transactions continue to run at only three-quarters the pace before the credit crunch. It suggests the picture would have been a lot bleaker had it not been for much higher activity from last-time buyers (LTBs).

It was also revealed that 63% of older homeowners own their property outright – accounting for 84% of all outright owners in England and holding a disproportionate share of housing equity (£1.8 trillion out of a total £2.6 trillion).

What’s more, in 2016/2017, LTBs in England accounted for nearly all of the moves (132,000) by outright owners (138,000), which were up 20% overall since 2006/2007 (115,000).

LTBs lack suitable housing options

While LTBs currently account for a small percentage of the 55+ home-owning population, 47% of homeowners aged 55+ plan to downsize at some stage. A separate study suggests that there are 3.1 million LTB households looking to downsize, with the figure set to grow to 3.7 million by 2026.

A broad range of factors serve to hinder LTB activity, but poor choice of suitable properties to buy, high transaction costs and affordability pressures remain the most prominent.

IMLA’s report found that relatively few older homeowners actually move for health and other personal reasons. And, although older people prefer to move to a smaller, cheaper home, there is a wide spectrum and strong numbers of older homeowners looking to move in the opposite direction.

Kate Davies, executive director of IMLA, commented: “Our increased life expectancy and growing number of people aged 55+ means that, far from being a niche sector, the number of LTBs in England has doubled within a decade.”

She said that appetite among older homeowners to move into a property better geared to their needs in later life is strong, but ‘they face a number of headwinds in achieving that’. 

“It is curious that house-builders appear to have been slow to recognize what could be a sizeable market for a variety of designs that combine practicality, low maintenance and energy efficiency,” she added. “Retirement developments aimed at senior citizens have their place, but they’re not appropriate for everyone.”

From a lending perspective, Davies said there has already been ‘considerable financial innovation’ around mortgages into retirement, lifetime mortgages and retirement interest-only products.

However, she declared that much more could be done in strengthening LTB schemes, whether these are entirely new arrangements, bespoke equity loan deals or shared ownership schemes.

“It may also be time for the Government to address this LTB policy blind spot and begin to work more closely with the lending and house-building sectors to kick-start activity, much as it did for first-time buyers with its Help to Buy initiatives,” she continued.

She concluded: “With demographic-led demand set to increase, it is hard to avoid the conclusion that we need to unblock new supply and develop new models of housing that cater for mainstream LTBs.”

“We see huge opportunities for the housing and mortgage sectors to better serve the interests of older homeowners over the coming years, and in ways that promote their lifestyle and well-being, as well as the wider health of the housing market.”

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