Both problems have been aggravated by the worsening housing shortage, which is affecting every rung of the ladder.
Many older homeowners feel trapped in properties that are no longer suitable for them, either because they are too big, too expensive to run or too difficult to maintain.
Yet more than three million last-time buyers aged 55 and over are sitting on an incredible £938 billion of residential property, a figure that is set to pass £1 trillion this year, according to research from insurer Legal & General and economics consultancy CEBR.
Downsizing would cut household bills, while profits from the sale could top up pension income.
The number of people looking to downsize has increased and sits at nearly 40 per cent, yet most are trapped because the UK has a chronic under-supply of properties for older people to move into.
Last year, a mere 7,000 new homes were built for this age group, a fraction of the amount needed, making it the most under- supplied area of the housing market.
Four out of five who have considered downsizing in the last five years ended up staying either because there were no suitable properties available, or because they were too expensive.
This logjam at the top of the ladder hits those lower down and Phil Bayliss, head of later living at Legal & General, said last-time buyers could play a crucial role in unlocking the entire housing market: “If would-be downsizers were able to move to a property more aligned to their lifestyle and needs, vast swathes of homes would be freed up for growing families and second steppers.”
He added that as the population ages the Government needs to take action now, by setting targets for local authorities to build more later-living homes, which should be exempt from stamp duty to cut downsizing costs.
HomeOwners Alliance chief executive Paula Higgins said most older buyers have nowhere to move to: “Our own research found that more than half a million homeowners over 55 cannot move because there is no suitable housing.”
The challenge facing last-time buyers is as acute as the one facing first-time buyers, who Chancellor Philip Hammond targeted with a stamp duty cut last year.
“Trying to solve the housing crisis by focusing on first-time buyers alone is akin to bailing water out of a leaking boat instead of fixing the hole,” said Higgins, who added that urgent action is needed.
“To get us out of this mess, we need to look at the number of homes being built, whether they are the right types, in the right places and with the right infrastructure and facilities.”
David Hollingworth, associate director at brokers L&C Mortgages, said even if the property is available, downsizing is expensive: “You may generate less than you think after estate agency and conveyancing fees, removal costs, stamp duty charges on your new property, and any changes you may want to make to your new home.”
He added that many older people are reluctant to move for sentimental reasons, and some like having the cushion of spare equity in their home: “They will often be loathe to reduce that, as they could use it to generate extra cash through equity release, or leave it as a legacy for their family.”
The problem is that most older people do not have any choice in the matter and are forced to stay where they are, making it harder for everyone else to get moving.
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