How To Buy A Property As A Last Time Buyer
There is always a lot of talk about first-time buyers. While this is rightly so, and especially given how momentous the occasion of purchasing your first ever property is and how tied it is to the state of the property market, this is not the only important buyer out there. In fact, there is a rarely talked-about group of property investors that are currently pouring millions of pounds into the British economy - they are, last-time buyers.
What is a last-time buyer?
As the name suggests, a last-time buyer (or LTB) is an individual or couple purchasing a property for the last time during their lifetime. Usually this buyer is aged between 65 and 69 (the optimum time to purchase a house or flat for the final time, according to experts), although obviously they can also be much younger or older. To fit the classic definition of a LTB, you would be aged 55 or older.
Why are last-time buyers worth talking about?
LTBs account for almost £1 trillion of property worth. This year, they are expected to well exceed that figure.
They now own £938 billion of housing stock and this will reach the £1 trillion mark this year, according to new research by Legal & General, the FTSE 100 financial services group, and CEBR, the economics consultancy.
As such, it is evident that LTBs are extremely important to the local economy and housing market in general.
What other trends are we seeing?
It is very common for LTBs to downsize their property, in a search for better living standards in later life. The days of living out your days in England seem to be coming to an end, as more older people wish to go on holidays during retirement, purchase new cars and other luxuries, or even gift children, grandchildren and other family members with money left-over from selling their larger home.
According to the research mentioned above, there are now 3.1 million Last Time Buyer households in the UK, with the number of homeowners who have considered downsizing rising from 32% to 39% in the past three years.
Older homeowners are also looking for ways to help younger family members onto the housing ladder. Downsizing or even taking out a lifetime mortgage (through Equity Release - where the individual decides not to downsize or leave their home but instead release funds from their existing property) are common ways to do so.
Reasons to consider downsizing
There are a number of reasons older people decide to sell or buy a property to downsize. These include:
- To profit from the exchange in order to pay off debts, live a better lifestyle in retirement or gift funds to family
- They simply feel they do not require the space of a family home anymore and want a more compact property
- The size of the property and features (e.g. many stairs, large garden that needs to be looked after) may be difficult to maintain and access during later years
- The location of their home is no longer convenient or desireable (maybe the are is a ‘family’ place and not so suited to a retired lifestyle, isn’t close to other family members or local medical facilities and other amenities or doesn’t allow for the person’s desired lifestyle. For example, many LTBs decide to relocate to the countryside or near the coast
- Downsizing sooner rather than later can also be a preference for many, given how time-consuming, complex and stressful selling or buying a property can be, as well as the moving process
Problems facing LTBs
The aforementioned research also shows that of the last time buyers who had considered downsizing in the last five years but didn’t, some 49% said it was because there were no suitable properties available, with a further 29% stating that the properties that were suitable were too expensive.
Developers need to be producing homes suitable for these category of buyer, in terms of both size, structure, location and price point. The Government should focus not just on FTBs and helping them on the housing ladder, but also buyers in a later life stage who have funds to spend.
Besides the obvious benefit of having people in houses and flats suited to them, appropriate housing has also been shown to ease pressure on NHS and GP services, through a 50% reduction in GP visits and 40% reduction in NHS spend. As such, the housing crisis is closely linked to NHS costs associated with an ageing crisis. The simple fix would be to build more houses!
Tips for older buyers
It might have been awhile since you’ve last purchased a property. Indeed, maybe you’re still in your first ever home! Here are some handy tips from our conveyancing experts…
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Content correct at time of publication.