Barclays policy report estimates ‘Right-sizing’ could free up 3.8m UK homes

• A new Barclays public policy report finds that, with the right incentives, an estimated 3.8m households could be motivated to ‘right-size’, unlocking capacity in the housing market
  
• One of the main barriers to right-sizing is the complexity of the moving process – 85 per cent of homeowners say that moving home is "always stressful"
  
• Right-sizing is not just for later-life homeowners, with 36 per cent of under-occupiers aged between 45-64 years old
• The report makes five recommendations to government and policymakers to make right-sizing a realistic and desirable option for under-occupiers on a large scale
• Barclays Property Insights combines data and research from across the Bank to give an in-depth perspective on emerging housing trends in the UK

A new report from Barclays Property Insights, “Right-sizing Revolution: unlocking untapped capacity in the housing market”, finds that alongside building new homes, ‘right-sizing’ could be an important part of the solution to the UK’s complex housing crisis – if properly incentivised. Whilst the report acknowledges the steps being taken by government to solve supply issues through house-building, Barclays finds that extra capacity in the market could be released if under-occupiers were to right-size on a large scale, and recommends five policy changes which could enable this to happen.

The Barclays report notes that 85 per cent of owner-occupied homes in England and Wales contain one or more ‘spare’ bedrooms and are therefore ‘under-occupied’¹. This constricts the availability of larger homes for families and younger buyers, causing a ripple effect throughout the housing market. Right-sizing – or moving to a home with fewer bedrooms – could ease some of this impact.

Analysis from Barclays and Ipsos finds that an estimated 1.7 million households are already open to right-sizing within the next 1-2 years. However, with the right policy interventions this could rise to as many as 3.8 million estimated under-occupiers encouraged to right-size at some point in the future, freeing up much-needed ‘spare’ capacity. These interventions, alongside the Government’s ambitious house-building plans, could offer a comparatively fast and cost-effective way to address the UK’s housing supply shortfall.

Getting to the heart of the under-occupier market
The decision to move is highly personal, grounded in emotion, mindset and perceptions of personal benefit, as opposed to the benefit to society more broadly. When considering barriers to right-sizing, more than six in 10 (61 per cent) under-occupiers say they feel an emotional attachment to their current home because of memories and the effort they have put into their property. In light of that personal attachment, understandably under-occupiers are less motivated by a sense of obligation, with only 20 per cent saying they think people should right-size to free up homes for others. This demonstrates that strong, targeted incentives are required to convert interest in right-sizing into action.

The under-occupier market is also considerably more diverse than often implied, with a broad range of homeowners having spare capacity in their homes. While ‘last time buyers’ do form a significant segment of possible rights-sizers, more than a third of under-occupiers (36 per cent) are aged between 45-64 years old, so incentives need to be considered across a range of consumer demographics.

Mover motivations
Nearly half (45 per cent) of under-occupiers report cost as a key inhibitor to moving home, while “having a home that requires less maintenance” (39 per cent) and “having a cheaper home” (26 per cent) were top factors which would encourage them to move. Therefore, the creation of financial incentives and assistance would be the most powerful policy lever, with nearly four in 10 (38 per cent) under-occupiers saying this would make them likely to right-size.

Meanwhile, the complexity of the moving process is a major barrier for four in 10 (40 per cent) under-occupiers, while 85 per cent of both homeowners and under-occupiers agree that moving home is “always stressful”. This suggests that improvements to the buying and selling process could significantly impact perceptions of moving.

Suitability of supply
Housing supply is intrinsically linked to the desire to right-size, as a priority for many is finding the ‘right’ property. The report identifies the three under-occupier segments with the highest propensities to right-size²: ‘Family-focused’, ‘Suitability Seekers’ and ‘Pragmatic Movers’. Three-quarters (75 per cent) of the most ‘movable’ segment, ‘Pragmatic Movers’, would consider right-sizing if a greater number of suitable properties were available. However, increasing housing supply alone will not be enough – more effective signposting is needed to drive awareness of new properties and their potential benefits.

‘Suitability Seekers’ would be particularly open to right-sizing if there was more accessible or age-friendly accommodation, with three quarters (73 per cent) agreeing that this would make them more likely to move. However, confidence is a key barrier to moving for this group, with two-thirds (67 per cent) saying more information and support available would make them likely to right-size.

The solution
To tackle some of the barriers to right-sizing and tap into existing motivations for movers, Barclays makes five recommendations to government and policymakers which, if implemented, could help unlock the spare capacity identified within the housing market:

1. Broaden perceptions of under-occupiers beyond just older people. In designing interventions to drive behaviour change, government should consider multiple under-occupier demographics, with the benefits to homeowners (rather than society) at the front and centre of policy design and communication.
2. Implement targeted financial incentives. For example, grants, vouchers or the ability to offset moving costs against Stamp Duty – for individuals that choose to downsize.
3. Help make home buying simpler and less stressful. Convene a joint working group – in partnership with industry – to explore and implement changes to improve the home buying and selling process. This would benefit all home movers, including right-sizers.
4. Improve visibility of new housing. Raise awareness and consideration of right-sizing by encouraging local authorities to work closely with housebuilders, local media and key stakeholder groups to improve the signposting of new developments across the UK.
5. Build more retirement and age-suitable housing. Reform the planning process by requiring local authorities to plan for this type of infrastructure, while also considering affordability issues.

Mark Arnold, Head of Mortgages and Savings at Barclays, comments: “Housing supply shortages are well documented and we fully support the Government’s ambitious house-building plans. However, a stronger, more holistic strategy is needed to tackle the immense issues faced by the housing market, including the challenges faced in the demand side.”

“Our public policy recommendations could help to support those people who are not currently seeking to move, to right-size into accommodation that suits their needs and saves them money, whilst unlocking crucial capacity within the housing supply chain.”

David Thomas, Chief Executive at Barratt Development, said: “The Barclays report highlights potential barriers to the diverse group of people who may benefit from moving to a more manageable home that is cheaper to run and continues to meet their needs.

“If some of those barriers are removed, Housebuilders and local authorities can work together to increase the supply of energy efficient new homes located with easy access to amenities and community facilities to help people find their right home and help free up larger homes for growing families.”

-Ends-

Notes to editors

For more information, please contact Annie McQuoid at annie.mcquoid@barclays.com

¹‘Under-occupiers’ are individuals living in properties with surplus bedrooms compared to the number, age and gender of the people living there, as defined under the ONS Bedroom Standard.

²Three of six under-occupier segments were identified as having medium to high right-sizing potential:

• ‘Family-focused’: This segment represents 12% of the under-occupier market and is characterised by some reluctance to move driven by emotional considerations, but this is countered by a strong desire to be closer to family. They are typically aged 55+ (55%); with good financial resilience (70%). 55% own their home outright.
• ‘Suitability Seekers’: This is a segment of around one in ten (11%) of under-occupiers who are motivated to right-size by the need for accessible, specialised, age-threshold housing. They are typically older (53% are 65+); have medium financial resilience (65%) and own their home outright (74%).
• ‘Pragmatic Movers’: This segment makes up about two in 10, 18%, of under-occupiers, and has the highest propensity towards right-sizing overall. These individuals would primarily be motivated by housing availability, and financial support/incentives. They are typically 55+ (66%); have good financial resilience (70%) and own their home outright (58%).

Ipsos research

Barclays ran a nationally representative online survey of 4,324 adults 18+ in Great Britain with the research agency Ipsos. Data have been weighted to the known population profile.

Within this audience, 2,206 respondents identified qualified for the target audience of ‘owner-occupiers’ - also referred to as ‘homeowners’ - in England and Wales, defined as individuals that contribute directly to the mortgage or are outright owners (fully/partially) of their main residence.

The ONS Bedroom Standard was used to identify home-owning respondents who count as ‘under-occupiers’, of whom 1,785 were identified. The survey took place from 24th –27th May 2024, and segmentation analysis was subsequently conducted on the under-occupying home-owners to understand which groups within this audience could be more open to rightsizing either now or in future.

Population totals are estimated values and have been calculated using 2021 Census data findings, combined with our own data findings. See report Footnote 24 for methodology. Confidence intervals also apply to the survey on which the segmentation and these estimates are based. It should also be noted that we cannot validate the sample profile of under-occupiers as this information is not available, and that segment populations are not uniformly identical in their characteristics, or their existing and likely behaviours.

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Barclays Public Policy Report

The full policy paper created by Barclays’ Group Policy Development team, is available on Barclays UK unlocked

Barclays’ Group Policy Development team creates public policy thought leadership content on behalf of Barclays. The work draws on the Bank’s expertise, data and insights, and is intended to inform the design and application of public policy solutions in response to pressing economic and societal challenges.