Tuesday 12 December 2017

Calls for cash deals to get elderly 'empty nesters' out of large homes

26,000 houses could be freed up if ‘empty nesters’ moved

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Alan Barrett: ‘Proposal would risk social exclusion'. Picture credit; Damien Eagers
Charlie Weston

Charlie Weston

Giving cash to thousands of older people to move out of larger homes could free up properties for families, a leading think tank has suggested.

The Economic and Social Research Institute (ESRI) estimates that around 26,000 couples are empty nesters - they are living in large homes after their children have left.

These people are over the age of 50, and in homes with four or more rooms.

Trinity lecturer Dr Ronan Lyons and Nama are among those who have suggested that older parents could be given financial incentives to leave their large homes to allow them be bought by families.

First-time buyers are struggling to get on the first step of the property ladder because of a lack of supply, plus the massive increase in the deposit required to get approval for a mortgage.

Buyers in Dublin are now using a deposit of €50,000 on average to secure a mortgage.

In a new academic paper on incentivising older people to move house, the ESRI said there was little evidence that elderly people regularly move home in this country.

Looking at people aged 50-plus over the course of three years, it found just 3.1pc moved home during this time.

And unlike some other countries, there is no evidence of older people moving out of Dublin or urban areas into rural areas.

The ESRI report did note that a large number of older people living alone are already in small homes - so there wouldn't necessarily be a bonanza of large homes available under an incentive scheme.

However, it also noted "a reasonable proportion of older couples living in houses with seven or more rooms."

Three out of 10 of those over the age of 50 are in homes of seven or more rooms, which equals about 26,000.

But the report found there were social disadvantages to getting empty nesters to move out. The ESRI says large numbers of older people living alone did not have children.

Co-author Dr Alan Barrett said: "While the data shows scope to achieve greater availability of housing through incentivising mobility of older people, any such policy should consider the potential for social isolation among older people who move to an unfamiliar area."

The ESRI does not state what incentives could be put in place to get empty nesters to downsize, but they could include a dropping of property tax for a period, or a subsidy for moving.

The new ESRI report, in response to the housing crisis, came as a separate study revealed that just 8,000 homes were sared last year.

Property Industry Ireland, which is part of employers' body Ibec, said there was an increase in new buildings in the last three months of last year, but added that market activity remains depressed.

Estate agents body IPAV (Institute of Professional Auctioneers and Valuers) called for a Cabinet post for housing.

It said the cost of building the average house could be reduced by €32,000 if the State provided builders with access to low-interest lending, and reduced VAT and levies on construction.

Meanwhile, the Central Bank has been called on to relax one of two lending restrictions that it is claimed is keeping first-time buyers out of the market.

Buyers are subject to rules on the size of deposits and on the amount of income they can use.

New Zealand brought in two similar lending rules - a limit on the amount borrowed relative to income and rules on the sizes of deposits. But it eased back on these rules six months later. The rules here have seen mortgage deposits swell to €51,000 on average in Dublin. This is double what it was in 2012.

Mortgage experts estimated as many as 12,000 people will be locked out of the housing market because the Central Bank has left them in "rent jail". The Central Bank said it will publish a review in November on the rules that determine the amount that can be borrowed.

Irish Independent

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