The downsizing penalty trapping millions of pensioners in their homes

Martin Mason, 72, desperately wants to downsize. He still lives in the five-bedroom home where he raised his family, but it is mostly empty.

He says: “Downsizing would be a brilliant move for us, but the main problem we have is the cost – paying stamp duty is just horrendous, plus the actual cost of moving. 

“If we trade down and pay all those costs, we just will not be able to maintain a decent quality of life. There isn’t good housing for us around here.”

Mr Mason, of Horsham in West Sussex, is among potentially millions of older homeowners who are trapped in homes too large for their needs.

The cost of moving can easily ramp up into tens of thousands, if not hundreds of thousands of pounds. Stamp duty, legal costs and a lack of affordable or even suitable housing alternatives keep older owners stuck in homes they would rather not live in.

There are growing calls on the Government to act to free up family homes for younger buyers to help ease the housing crisis. Almost 90pc of people aged over 65 live in “under occupied” homes, according to the International Longevity Centre, a research institute. Carving out financial relief for these pensioners is by no means an alien idea to government. 

Last week, former Cabinet minister Damian Green floated at the Conservative conference: “If you’ve got a big five-bedroom house you will be able to sell it for a lot of money, but there’s no point selling it if you can’t spend that money on something that will be convenient for you,” he said.  

“Having had all these schemes for first time buyers, why don’t we have schemes for last time buyers. Perhaps no stamp duty if you are downsizing to something and releasing a family home – why not give you some kind of incentive to actually do that?”

Four million older people want to move home, according to research from the Centre for Ageing Better. But the research institute says only around a fifth of those aged over 50 expect to be able do so. The recent study found that the majority of people moved for “family or personal reasons”, but found that many moved because they wanted a smaller home. 

However, Mr Mason says: “It is virtually impossible to get decent bungalows as they are in bad areas. And I would never buy a retirement home flat, they are grossly expensive and when you die, they can be a real problem for your dependents. 

“Our house at the moment is fantastic, we could sell it very quickly, especially as the schools around here are good. But then what are we meant to do? We could sell our house and then rent, but what benefit is that for us? The Government should help us by reducing the cost of selling this asset.” 

Stamp duty relief for downsizers could well free up space for younger buyers looking for affordable, family sized homes. A third of homes in England are believed to be under-occupied, with two or more bedrooms not in use. 

But the trouble for older movers is a lack of decent choice. Deborah Slade, 60, lives in a four-bedroom house in Cheshire with her husband. Their two grown-up children now live in London. 

“We want to downsize, but everything we see is not quite right,” she says. “We don’t want to go into something like a two-bedroom retirement apartment – we are still active and still at work. We still want something with room for guests and a garden, but there is nothing on the market for us. 

“We get letters through the door a lot from younger families saying if we ever want to sell our house, they are interested. They probably have children who are aged around eight or nine, but they are struggling to find anything. 

“It seems everyone is struggling, so personally I do not think my generation should get any stamp duty relief, especially because we are actually in competition with some of the younger families looking for decent sized homes.

“But there is clearly a problem here for older people, and there just isn’t a lot out there for downsizers who don’t want horrible retirement apartments.” 

Neil Webster, who is in his 70s and also trying to downsize to Gloucestershire to be closer to his children and grandchildren, said stamp duty was the least of his worries. His four-bedroom house in Preston has been on the market for 10 weeks, and still has not attracted any offers. 

“The house is ideal for a family but we’ve had to reduce the price by £20,000,” he says. “The market is flat as a pancake, I know homes that have been on the market for 18 months. If and when we get a reasonable offer, we will take it. 

“But we are competing against the new builds. In this area there are fields of them, and I just think: this house isn’t going anywhere. 

“We do not need a big house, we just need two bedrooms and with a bit of luck a garage. My wife loves to garden, which is a healthy thing to do. We would prefer a bungalow but they just do not exist in nice areas, they look really miserable. 

“At this stage, if it gets round to April, we will probably just rent down there anyway because the time we spend with our grandchildren is far more important to us than money. We are just too isolated up here.” 

This is not just a problem for wealthy baby boomers – more and more pensioners in relative poverty own their homes. While on paper they may be asset rich, many do not feel so on a day to day basis.

Heating large, draughty buildings can be especially expensive during the winter months – and there are now nearly a million “non-decent” homes that are lived in by someone aged older than 65, 78pc which are owner-occupied, according to research for the Centre for Ageing Better.

This counts homes that either have a hazard or immediate threat to a person’s health, are not in a reasonable state of repair, lack modern facilities or are not effectively insulated or heated. 

Giving “last-time buyers” a tax incentive to move out of largely empty buildings could help fix Britain’s housing shortage. But without anywhere to move to, baby boomers will struggle to let go of their beloved family homes. 

“Stamp duty relief would be the minimum,” Mr Mason says. “But finding somewhere else to live is so incredibly stressful and you have to be able to get some money out of it. We’re not all rich in retirement. 

“There is a serious shortage of housing for us too and at the end of the day, it has to be worthwhile for people to move and not feel as though you are being punished for it.”