A healthy option
A greater focus on the senior housing market could have a positive impact on the overall supply of homes and is another route for reducing the country’s housing shortage.
Significant shifts in population distribution and responses to this will shape the emerging asset class of senior living. By 2030 20% of people in the UK will be aged over 65.
For those in the 65-75 year old bracket, men are expected to have on average 10.3 years of healthy life; for women it is 10.9. This group are also staying in work longer. In April 2019 11% of over 65’s were in employment and this is likely to increase in line with changes to the State Pension. Evolving models are becoming more sensitive to what these healthy seniors need and want. With more more job opportunities in urban centres for example, we are likely to see increasing numbers of senior living units in towns and cities, rather than the more traditional retirement venues of the countryside and coast.
Around 6,000 senior living units came to market last year, but estimates suggest that there is an annual demand for three to five times higher than that. In 2017/2018 three quarters of older households owned their homes outright. There is the potential for this group to release equity from their property by moving into smaller, more convenient accommodation. According to the RIBA more than a quarter of the over 55’s are considering moving home, but 49% feel that the current housing options are inadequate.
At the upper end of the market there are a growing number of development that provide high quality amenities, some domestic assistance and service charges that include all utilities and maintenance charges. Extending provision to an intermediate market aimed at serving older people unable to afford the higher end, but not eligible for social housing, requires a supportive legal and regulatory framework which enables new models of senior living housing and a wider range of providers.
Senior Living unit providers are changing their business models by offering more flexible buying options including shared ownership options, as well as rental and home ownership. These alternative buying models can help reduce the amount of stamp duty – in the current system, so reducing the penalty for older people who are downsizing. Changes to design, planning and information available to people would all also help make for more choice. Technology will be a helpful enabler in both the construction and design of these homes, to make them as safe as possible.
A greater focus on developing housing solutions for older people can bring benefits for residents –financial, physical and mental. As an asset class with plenty of room for expansion this area is receiving increasing interest from investors and developers, as a healthy option for them too.
With thanks to Dr Margarethe Theseira for her research into this topic for DAC Beachcroft.