A new report from Barclays, titled “Right-sizing Revolution: unlocking untapped capacity in the housing market“, estimates that incentivising ‘right-sizing’ could free up 3.8 million homes across the UK. The report explores how encouraging homeowners to downsize could ease the housing crisis by creating more capacity in the property market, especially as 85% of homes are currently ‘under-occupied’ with at least one spare bedroom.
The report identifies key barriers to right-sizing and offers five recommendations to government and policymakers to make the process more appealing to homeowners.
Right-sizing: a solution to housing supply shortages
Barclays’ report sheds light on the untapped potential of right-sizing as a strategy to address the housing supply shortfall. It highlights that 85% of owner-occupied homes in England and Wales are under-occupied, contributing to the shortage of larger homes available for families and first-time buyers. Right-sizing—moving to a smaller, more manageable home—could unlock these larger homes and help alleviate pressure on the housing market.
Barclays estimates that with the right incentives, the number of homeowners considering right-sizing could increase from 1.7 million to 3.8 million. The report suggests that “right-sizing could offer a fast and cost-effective way to address the UK’s housing supply shortfall.”
Emotional attachment and costs: barriers to downsizing
One of the main reasons homeowners resist downsizing is emotional attachment to their homes. According to the report, 61% of under-occupiers cite memories and the effort invested in their property as reasons for staying put. This emotional connection often outweighs the societal benefits of freeing up larger homes for growing families.
Financial costs are another significant hurdle, with 45% of under-occupiers identifying moving costs as a key reason for staying. The report found that nearly four in ten (38%) under-occupiers would be more likely to right-size if financial incentives, such as grants or moving cost assistance, were introduced. “The complexity of the moving process and financial strain make it a difficult decision for many,” said Mark Arnold, Head of Mortgages and Savings at Barclays.
Finding the right homes for right-sizers
The availability of suitable housing is critical for those considering right-sizing. The report found that three-quarters of the most likely group to downsize, referred to as ‘Pragmatic Movers,’ would consider moving if more appropriate homes were available. This highlights the need for better visibility of suitable housing options and improved awareness of new developments tailored to the needs of right-sizers.
David Thomas, Chief Executive of Barratt Developments, echoed the need for targeted development, stating, “If barriers are removed, housebuilders and local authorities can work together to increase the supply of energy-efficient new homes with easy access to amenities and community facilities.”
The report also calls for the construction of more age-friendly and accessible homes, as 73% of potential right-sizers agreed they would move if such options were available.
Five policy recommendations to unlock housing capacity
To encourage right-sizing on a large scale, Barclays has outlined five key policy recommendations for the government:
- Broaden the focus on under-occupiers: Right-sizing shouldn’t just target older homeowners. A diverse range of under-occupiers exists, and policies must appeal to younger homeowners as well.
- Financial incentives: Offering grants, vouchers, or the ability to offset moving costs against Stamp Duty could make downsizing a more financially attractive option.
- Simplify the moving process: The report suggests working with industry experts to streamline the home buying and selling process, making it easier and less stressful for homeowners to move.
- Improve visibility of housing options: Local authorities, housebuilders, and stakeholders should work together to raise awareness of suitable homes, particularly for under-occupiers looking to downsize.
- Build more suitable housing: Planning reforms are needed to ensure local authorities prioritise building retirement-friendly and age-appropriate homes.
A new approach to tackling the housing crisis
Barclays’ report presents right-sizing as a practical solution to the UK’s housing challenges, offering a way to unlock millions of under-occupied homes. By implementing targeted financial incentives and building more suitable properties, the government could create a significant shift in the housing market.
Mark Arnold emphasised, “Our public policy recommendations could 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.”
The report suggests that a combination of housebuilding and right-sizing could significantly improve the housing market, offering more options for first-time buyers and growing families while providing homeowners with more suitable living arrangements.
