2 weeks Ago By Newton Emerson
While targeting social housing tenants was considered particularly cruel, the central failing of the bedroom tax also applies to owner-occupiers: there is nowhere for them to downsize to. Suitable properties are not available, or are so scarce they sell for a premium, making it pointless to move. The Irish Government is considering a relaxation of planning laws to allow small houses to be built in back gardens.
This has been widely reported as a downsizing policy, although it would scarcely make a dent in the problem. Few homeowners have the necessary space, wherewithal and desire to take advantage of such a change in the law. The ideal retirement property for most people seems to be a two-bedroom detached bungalow with a decent garden and a garage, in a quiet neighbourhood within walking distance of all amenities.
The next time you are speaking to an estate agent, recite this description and see if they can keep a straight face. Many retirees can also see the appeal of apartments, until they see what most apartments are like. In the real world, developers are compelled by economics to build three-bedroom semidetached houses.
Little else is available to prospective buyers across Ireland, north and south. Regulation pushes developers in the same direction, including rules to assist the elderly, ironically. The requirement for all new houses to have a downstairs toilet, introduced across the UK and Ireland over the past three decades, is taken by builders to make two-bedroom semis uneconomic, as it means too large a ground floor.
Surprisingly little attention is paid to the demographics of downsizing, considering the issue is driven by an ageing population. Not only are people older on average and living for longer, but they are having children later and those children are remaining at home for longer – the latter due primarily to the housing shortage . A generation ago, a typical couple might still be in their early 50s when the last of their offspring left home.
Today’s downsizers are closer to 70 and in no mood to rewire and replaster. They will want a new-build home, unless they can find something maintained to an equivalent standard, as taking on even the routine renovation of an older property is a daunting prospect in retirement. Yet building homes specifically for them may be a mistake.
If swathes of small bungalows were built they might only sell to retirees once, before becoming fixer-uppers future retirees might not want to buy. So downsizing in Ireland is the hope that an older couple in a four-bedroom house will outbid a young couple on a new three-bedroom semi, freeing up the four-bedroom house to be bought by a family moving up the property ladder, who will sell their previous home – probably an older three-bed semi – to the young couple priced out of the new semi. The teenager getting that fourth bedroom would need to appreciate all the trouble they have caused everyone else.
This rearrangement of the property deckchairs is meant to benefit the older couple by releasing equity and saving on bills. Although equity release could be substantial, it is still unlikely to be life-changing for most people once the costs of moving are taken into account. British and Irish governments have so far ignored all pleas to exempt downsizers from stamp duty.
Until they do, it will be hard to believe they are taking this subject seriously. Savings on bills may also be overstated, especially in Ireland, where there are no water charges, north or south, and only limited property-value taxes, mainly in the north. Under its 2015 deal with Westminster, Stormont was supposed to build more small social housing units for new and existing tenants, enabling bedroom tax mitigation to be phased out.
Predictably it has failed to do so, but at least that approach would work with social housing, where public bodies maintain property and provide tenancies. It is preposterous to expect older owner-occupiers to descend a broken property ladder by themselves to an extent that would make any useful difference. Downsizing is a distraction from the eternal problem of just building more houses in general.
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