Housing is on the lips of every politician; however, a new analysis from Frank Knight warns that policymakers need to pay more attention to the types of home that the UK needs.
Amid tentative signs that the spectrum of housing demand is being taken into account, new Knight Frank analysis shows that the stock of private retirement housing accounts for just 0.6% of dwellings in the UK.
The supply of new housing does not match projected demand. But within this, there is also a need to focus on the type of housing need, looking at demand in terms of demographics as well as overall numbers.
While much attention is quite rightly paid to the housing shortage for first-time buyers trying to climb onto the property ladder there is a less headline-grabbing trend which is just as notable in the market – the shortage of homes specifically designed for older people.
While the ‘retirement housing’ market may seem specialised, Frank Knight argues that creating homes for older people has wider implications for an interconnected market – more retirement housing could loosen constraints in the rest of the housing market as more family houses become available, allowing more people to move up and down the housing ladder.
“Increasing the provision of housing suitable for older people will have direct benefits across the whole housing market, for all generations,” said Emma Cleugh, head of institutional consultancy for Frank Knight.
Frank Knight’s analysis of the latest data from the Elderly Accommodation Counsel (EAC) shows the challenge in the market. There are currently around 715,000 homes loosely classed as ‘retirement housing’, ranging from age-restricted developments to close care housing.
The delivery of new units in 2016 is projected to be around 5,500, accounting for around 3% of estimated total housing delivery. In comparison, some 7.8 million people, or 18% of the population is aged over 65, with 12% of the population aged 70 or over.
Not all older people will choose to move from their existing homes as they age – indeed many will stay, unaided or with care. But a significant proportion of older people would like to move into purpose-build accommodation.
Research conducted by Knight Frank showed that 25% of over-55s would consider moving into purpose-built retirement housing in the future, a potential pool of demand of nearly two million homeowners.
“There is significant appetite in the market to develop and invest in the retirement housing sector and provide specialist and aspirational housing that the older generation now demands,” said Cleugh.
In order to enhance delivery, the support of local authorities through the planning
system will be needed. This issue was underlined in the recent HAPPI 3 report from the All Party Parliamentary Group (APPG) on Housing and Care for Older People.
In a positive move earlier this year, Boris Johnson, then Mayor of London, updated the London Plan – setting out targets for the delivery of specialist housing for older people across the capital. To meet the plan’s objective, some 3,900 specialist housing units should be delivered every year over the next decade, 2,620 of which should be private – with the added proviso that existing rented units which become unfit to use should be replaced outside these totals.
The on-going discussion around ‘Event Fees’, the charges that are sometimes rolled up to be paid on the sale or other transfer of a retirement property, is also heading towards a conclusion.
After an investigation by the Office for Fair Trading, and then the Law Commission, a Code of Practice surrounding Event Fees was drawn up and put under consultation, which ended on 31 October.
The main tenets of the Code include increased transparency around how and when the Fees are levied. It is likely that the final Code will be released in the first half of next year, ending several years’ of uncertainty on this issue, and providing a stable policy environment for both developers and buyers, which could result in rising inflows of investment into the sector.
“Now that the resolution of the OFT and Law Commission investigations into event fees in the retirement housing sector looks to be on the cards, we anticipate significantly increased levels of activity across the sector,” said Cleugh. “However, it remains to be seen whether the scale of investment will begin to re-balance the current mismatch between supply and the pool of demand in this market.”