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Is property’s trickiest deadlock about to be broken?

By Andrew Ellinas LL.B.Monday, 30 November 2015

Is property’s trickiest deadlock about to be broken?

The most popular property analogy has to be ‘getting on or moving up the property ladder’.  The ideology is simple - you start at the bottom and climb up the rungs, moving to a bigger or better property along the way.

It has been suggested that a bottleneck is forming in the property market, which has caused consternation at the top, the middle and the bottom of the metaphorical ladder. “As a Central London estate agent, it’s something Sandfords has been charting,” comments Andrew Ellinas, the agency’s Managing Director. “With generations living longer, healthier lives, staying in employment past their 60s and generally being more active, the three- and four-bedroom family homes that would once have be sold when they became ‘empty nests’ too vast to upkeep or enjoy are being retained by retirees.”

Some property commentators are pinpointing this retention for the lack of movement up the property ladder, with young families finding a shortage of bigger homes to move to and therefore being stuck in properties that are best suited to first-time buyers. It’s the property industry’s version of bed blocking, you could say.

While the suggestion that retirees in large houses should sell up to make way for young families, who, in turn, free up starter homes for property novices has been publicly aired, it is a sensitive matter that polarises people.

A solution, however, has been offered by a group of mortgage lenders. In early November 2015, 30 building societies promised to revisit rules for retired homeowners, giving them access to mortgages that could extend into their 80s and 90s. It is hoped the review will allows thousands of retirees who would like to downsize but have be thwarted by strict age-capped lending criteria the flexibility to move.

The reconsideration of lending criteria is also touted as a solution for retirees who would like to free equity to help children and even grandchildren get on or climb up the property ladder. The move would allow older homeowners with equity a way to remortgage and spread the new repayment costs throughout their twilight years.

While it’s muted that building societies would be happy to take repayments from 90 year olds, there’s another proposed way of thinking that would see age disregarded altogether. Instead, personal wealth and pension power would be taken into account as a means to repayment reliability.

“The conventional property ladder is becoming less applicable, even when it comes to Central London property,” concludes Ellinas. “While house prices continue to rise and a shortage of housing prevails, the flow of property is always going to be challenged. If the new lending criteria from building societies helps free bigger homes or enables parents and grandparents to gift money to first-time buyers, it should help fluidity in London and across the country.”

If you would like advice on buying or selling, remortgaging, downsizing or investing in property, please contact Sandfords Central London estate agents today.

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