‘The inquiry will examine whether the housing on offer for this group of people is sufficiently available and suitable for their needs and, in doing so, consider how older people wish to live. The Committee will take into account the context of significant housing shortages, rising numbers of older people and pressures on health and social care.’
The above is taken from the terms of reference of the House of Commons Communities and Local Government committee inquiry into housing for older people. This is a welcome enquiry and I would urge all who are involved in later life financial planning to supply evidence to the Select Committee through the forum it has established.
The forum can be accessed at – http://www.parliament.uk/business/committees/committees-a-z/commons-select/communities-and-local-government-committee/housing-for-older-people-online-forum/
We need to move away from soundbite politics. How many times will we hear, ‘older people are sitting on houses that are too large for their needs, creating a shortage of bedrooms for the younger generations’? If those bedrooms were made available by older people downsizing, they would be buying the same houses as those who want to move up the housing ladder. This would increase demand in those sectors of the market and increase prices – not good news for those trying to get on the housing ladder.
Also, recent research from the Centre for Better Ageing found that 80% of those over 80 wanted to remain in their current home for as long as possible. Their happiness in the twilight of their lives should be the primary concern in any housing for the elderly policy.
There are four areas of financial planning in later life: retirement income; mortgages and equity release; care funding; and estate planning. Home ownership or not is a major feature of each.
Take retirement income planning, for instance. For the vast majority of the population, the purpose of the plan is to use the assets the individual has to match the spending in retirement that will occur. If the person owns their own house, and is mortgage free in retirement, their retirement spending will be a lot less than if they still have mortgage outgoings or have to pay rent. As the spending on either can be substantial, have they have enough other wealth to meet their outgoings and finance their spending? Also, if someone downsizes, how should they invest the proceeds to meet their future income needs?
Mortgages and equity release must by definition involve housing. But how many turn to these solutions in older age because of one reason or another, but they are unable or unwilling to downsize to the home they want or require? How many turn to these solutions after making a downsizing error?
Is care going to be provided in the home? If so, is money required to adapt the home and finance the care provision? If it is not provided in the home does money have to be realised to finance care home fees? Does the home have to be sold for this reason?
The home is the largest asset most individuals have. Therefore, how the home will be disposed of is a large consideration for estate planning. Also, can the additional inheritance tax allowances, for passing on the home, be used to reduce or avoid inheritance tax?
Housing therefore is a crucial element to retirement income planning. Therefore in their day to day work, those involved with helping the elderly with their financial plans, are perfectly placed to give real life case studies to the House of Commons Committee.
I would therefore urge all involved with the later life financial planning to provide evidence to the Committee about what is, and what is not, working for older people. Hopefully this will lead to improvements in the housing market for everyone and we can get away from the same old maxim that ‘old people must downsize’.
Bob Champion is chairman of the Later Life Academy (LLA)
