Addressing the UK housing supply has been a key focus in government policy in recent years, and the Labour government made “building the homes we need” a core part of their election campaign.  “We fully support the Government’s ambitious house-building plans,” says Arnold, “however, a stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market, including the challenges faced on the demand side.”

This is a challenging market to navigate: as a result of inflation, interest rate rises and uncertainty, customers currently face enormous difficulties when finding and securing their future homes. “House building massively peaked in the 70s and has fallen ever since – now, it’s really at an all-time low in the UK.  Combining that with post-pandemic low demand for home-ownership makes for a very stagnant market, where people who absolutely need to move just don’t have many options, ” Arnold adds.

Barclays’ policy team has conducted extensive research with Ipsos on attitudes to right-sizing in the UK. The ‘Right-sizing Revolution: Unlocking Untapped Capacity in the Housing Market’ report shows that this untapped area within policy could help to optimise housing supply if correctly incentivised. According to the research, the right interventions by policymakers for under-occupiers could encourage as many as 3.8 million homeowners to right-size and unlock currently ‘spare’ housing capacity, making more larger homes available for those who need them.

So, who is a typical ‘under-occupier’ in the UK, and what would motivate them to consider moving to a more suitable property? The report shows that there is certainly a strong market for right-sizing in the UK, with as many as 1.7 million households already open to right-sizing in the next one to two years.

“Right-sizing can be a great lifestyle choice. It can free up capital – there’s less of a burden of responsibility when you move to a cheaper, more manageable home and you may have more money left over.” says Arnold.

The report shows that the under-occupier market is considerably more diverse than previously thought. “There’s an assumption that under-occupation is an older person’s problem,” says Arnold, “but our survey showed that over one in three under-occupiers (36%) are aged 45–64, and their locations are broadly distributed across England and Wales.” The government will consequently need to adopt a broad range of highly personal incentives to attract this varied demographic to right-sizing and rethink the traditional perception of under-occupiers as older, ‘last-time buyer’ households.

The decision-making of UK under-occupiers and their motivations for moving are also closely linked to their mindset and beliefs. “Finding the right type of property is highly personal and closely linked to satisfaction with your home,” Arnold explains. In fact, nearly two-thirds (61%) of under-occupiers surveyed said that they have a strong emotional attachment to their property. Right-sizing is also often a question of suitability, adds Arnold: “Finding the right property could mean moving to be closer to family or seeking somewhere that provides greater support in older age.” 

Significant barriers must be overcome to shift public opinion towards right-sizing, with 85% of surveyed under-occupiers saying that moving home is “always stressful”. The cost and complexity of moving home could also prevent people from right-sizing: nearly half (45%) of under-occupiers reported cost as a key inhibitor to moving home, while the complexity of the moving process is a major barrier for four in 10 (40%) under-occupiers. “There’s also a mental barrier to overcome,” says Arnold, adding that “you have to be able to take an imaginative leap when you start thinking about moving your life into a new home, and consider the opportunities that are out there.”

Simplifying the moving process and providing effective financial assistance for home-seekers should be an essential focus for the government. The research indicates that affordability and upkeep could sway opinion on right-sizing: “less maintenance” (39%) and “having a cheaper home” (26%) were both key factors for homeowners deciding to move.

There is also a need for targeted measures from the government that emphasise the individual benefits of right-sizing, with only 20% saying they would downsize their home for the benefit of others. 

“Our report is a really valuable tool for policymakers who are trying to make a positive impact in the housing market,” Arnold says. “When it comes to right-sizing, our research shows that it is essential for the government to hone in on particular groups to achieve success in this space.”

Barclays has set out five key policy recommendations for the government to tackle the barriers to right-sizing and drive much-needed change in the UK housing market.