Could ‘let to live’ help resolve the housing crisis?

Photo credit: CML
Photo credit: CML

When it comes to solving Britain’s housing crisis, we often hear of the need to build thousands of new homes to satisfy the growing demand for home-ownership. While we certainly do need to build in order to boost the supply of housing, it is also important that we look to the country’s existing housing stock to provide solutions to some of the problems in the property market.

Britain, like many European countries, has an ageing population. Statistics from the House of Commons Library predict the number of over 65’s will rise by 12 per cent in the next five years, and the number of over 85’s will grow by 18 per cent.

With people living longer, often occupying large family homes into later life, the pressure on our existing housing stock is only increasing.

Downsizing – easier said than done

Ideally, these individuals would seek to downsize. A report by the International Longevity Centre shows that almost a third of homeowners over 55 were considering or expecting to downsize, and the potential implications for housing stock are huge. According to Legal & General’s Last Time Buyers research, the over 55’s occupy the equivalent of 2.6 million family homes, or 7.7 million bedrooms.

However, downsizing is not always easy. There is a lack of suitable one or two bedroom properties on the housing market suitable for retirement living, and financial barriers such as stamp duty and the cost of moving also deter elderly homeowners from moving.

Clearly, emotional ties can also make the thought of leaving the family home a difficult prospect, whilst those who do move could find themselves in an unfamiliar area, away from family or friends.

With all these issues in mind, the mortgage market has a key role to play in making use of existing housing stock in an innovative way that enables elderly homeowners to stay in their homes. A Let to Live mortgage range could do just this.

A solution for all parties

Let to Live, an idea which I put forward in this year’s Council of Mortgage Lenders Rising Stars competition, would see mortgage lenders working together with housing associations, charities and local authorities to buy property from elderly homeowners and convert it into a number of units. The elderly homeowner would be able to live rent-free in one of the flats, which would likely be on the ground floor and converted to suit their retirement needs. All the units would be managed and maintained on behalf of the lender by a housing partner, and rented out to key workers or tenants on the local authority waiting list.

Upon the lender’s purchase of the property, the vendor would also receive a lump sum which would be based on the market value of the property, their age or life expectancy, the cost of converting the building, and the estimated rental income from the other units. This would allow the vendor to continue to live in their property, in a familiar area and close to their family or friends, and to pay for any necessary changes to their accommodation. Should the elderly individual move out or pass away, the lender could rent out the remaining units through its housing partner.

A precedent already set

Planning permission will likely be needed to sub-divide the property, and to create the necessary environment for Let to Live there will need to be some relaxation of planning laws to assist the conversion process. However, the Government has already set a precedent for this by temporarily relaxing regulation to allow developers to convert commercial buildings into residential properties. The Government could allow a similar exemption with mortgage lenders and local authorities to ensure these properties are only converted with Let to Live in mind.

Let to Live could provide a viable solution for elderly homeowners to remain in their property, in more appropriate accommodation without the worry of rent or mortgage repayments. At the same time, the cash lump sum they receive could be left as inheritance for their loved ones, whilst the newly created housing units would provide valuable accommodation to those in need of an affordable home.

Britain’s housing crisis is a long-term problem that isn’t solely going to be resolved by just building new homes. We need to make efficient use of our existing housing stock, but at the same time continue to support elderly homeowners who may be struggling to downsize, via innovative new solutions. I believe that proposals like Let to Live really are vital if we are to unlock the thousands of bedrooms tied up in our housing stock and to meet the rising demand for home-ownership.

Kasar Ayub, quality assurance test analyst, The Northview Group