Later living: realising the potential

Ameet Singh Heir
It’s a time of growth and transition for the UK’s later living market, with urgent demand for sustainable and diverse solutions.

With a population that is living longer and an already constrained housing market, the UK faces a challenge in providing sufficient suitable later living options. With just 0.5 percent of the UK’s over-65s living in retirement schemes, compared to 5 percent in the more mature retirement markets of Australia, New Zealand and America, there’s considerable potential for growth[1].

To date, there’s been a lack of proactive planning from both public and private sectors, to meet the challenge ahead. Current provision is largely directed towards the 2.9m over-65s within the highest affluence groups and with property wealth of over £300k. The south east of England has the greatest market share.

The concept of older people ‘rightsizing’, and releasing their existing properties into the supply chain, remains hypothetical when there are so few later living options available to them. There are very diverse needs, in terms of finance, healthcare, location and lifestyle preference, but researchers have noted that this demographic is all too often lumped into a single, homogenous group[2].

Encouraging people to move is not straightforward. There may be reluctance to join a ‘typical’ later living community, and tension in the perceptions around independence and dependence.

Consumer cultural perceptions around tenure type also come into play, with homeowners often seeing rental retirement properties or shared ownership as a step down—yet this could change in years to come, if moving from student accommodation to rented flat to family PRS to retirement property at 55 becomes an established norm.

There are currently more than 720,000 existing retirement units in the UK across almost 25,000 schemes. Of this, 75 percent of the stock comprises social housing and was predominantly constructed between 1970 and the 1990’s. Some 23 per cent of stock is privately owned or rented and 2 per cent hybrid (this includes shared ownership and licence tenures as from the EAC)[3].

Today’s new supply, however, is driven by private sector development. The current market has yet to open up to a full range of product types, but newer models of provision are beginning to emerge. These are especially prevalent in the rented sector where the influences of PRS and student accommodation are apparent. There is much to explore and understand, as stakeholders seek to work out what people want and what can be afforded.

Developers/operators are beginning to diversify their offer, with new products that meet a wider price point and recognise the wide range of needs. Differentiation is typically around amenity spaces, leisure facilities, space configuration and finishes, and integration with management/support/care services.

The mid-market and lower mid-market are especially ripe for expansion, given that the next generation of retirees will have lower individual wealth assets and may need to budget for even costlier health/social care.

The concepts of location and mode of living are also ripe for exploration and disruption: co-housing, for instance, is an interesting option that could potentially include inter-generational living.

In a market dominated by higher-end products, new affordable provision is badly needed. The government failed to address the issue in its 2018 white paper A New Deal for Social Housing, with the Centre for Ageing Better responding with a call for a long-term housing strategy that takes account of the specific needs of people in later life, including affordability and accessibility. The Centre highlighted the potential risks of non-regulated rents; loose landlord regulations; short-term tenancies; and poor housing standards with houses in disrepair and not adapted for later living needs.

New entrants to the market include institutional wealth funds, now recognising that later living can be a sound investment. For developers and contractors, there are barriers to entry. A handful of contractors dominate, and a larger pool would bring welcome competition as well as the capacity we’re likely to need in the future. Other challenges include the lack of clarity around terminology, tenure types and the planning system.

SNC-Lavalin’s Faithful+Gould business has many years’ experience of supporting stakeholders in the residential sector. We understand the different needs and drivers of private developers, land owners, PRS operators, local authorities and RSLs, and we add value throughout the project life-cycle. We have worked on a wide range of projects in the later living sector. Recent clients include Anchor, Sanctuary Supported Living, RMBI Care Co, and the New Earswick village, York, with Joseph Rowntree Housing Trust.

Please join us at the Housing LIN Annual Conference 2019, to hear more about our work.

[1] Retirement Living Comes of Age, Knight Frank, 2018

[2] The Five Challenges of Later Living, Barton Willmore, 2018

[3] Retirement Living Comes of Age, Knight Frank, 2018

 

Written by