A pressing need for more retirement housing
The rate of demographic change presents an unprecedented opportunity to increase the supply of retirement housing in the UK.
Rt Hon Sajid Javid MP, Secretary of State for Communities and Local Government, visits our construction site in Bromsgrove in October 2016
The UK’s population is ageing rapidly. Those aged 85 or over are expected to double between 2015 and 2035, and those aged 65 or over are expected to increase by almost 50%. Households headed by someone aged 65 or over in England are projected to increase by 155,000 per year, and will account for almost three quarters (74%) of total household growth to 2039.
Rates of home ownership are also highest among older people. More than three quarters of households (76%) where the oldest person is aged 55 or over own their own home either with a mortgage or outright. This is compared to around half (53%) of younger households.
The growth in the number of older people, and their high rate of home ownership, means there is a pressing need for more owner-occupied retirement housing. More than one in three people aged 65 and over (36%) are likely to move in the future if something suitable is available, and almost a quarter (24%) are keen to move to purpose-built retirement properties, which is equivalent to c.3 million people.
Despite increasing demand for more suitable housing, few older people currently move. The UK has one of the lowest moving rates among its older population compared to other developed countries, and this suggests strong pent-up demand. One of the main reasons for the low rate of moving among older people is the lack of suitable alternatives, including the long-term structural under-supply of retirement housing. Only c.141,000 units of retirement housing for homeowners have ever been built.
This indicates potential for strong growth in this market. Savills suggests that a build target of 18,000 retirement units per year would be appropriate in future , while Knight Frank suggests 30,000 units per year.
This is set within the wider context of a general under-supply of all types of housing. The UK built 152,380 new homes in 2014/15, well-short of the 200,000–300,000 homes needed per year to meet demand. In addition, the UK has delivered over 200,000 new homes in just four out of the last 14 years. Increasing supply of retirement housing could make a sizeable contribution to reaching this national objective.
Growing Government support
The importance of this part of the market is now recognised as being fundamental to UK housing policy. Housing for older people has become the only ‘critical’ housing need in the Government’s 2015 National Planning Practice Guidance. For the first time, it states that local authorities need to consider the size, location and quality of dwellings needed for older people in order to allow them to move to more suitable accommodation, and that supporting independent living can help to reduce the costs to health and social services, as well as free up houses that are under occupied.
Similar policies also now exist in Scotland and London, with the Greater London Authority’s London Plan, adopted in March 2015, stating that older Londoners require 3,600 to 4,200 new specialist retirement units per year over the period 2015 to 2025.
As a result, the planning system is becoming increasingly favourable for retirement housing, and this should have a positive impact on future provision given the increasing demand for this form of accommodation.