New research from Inspired Villages has highlighted that there are only 186k retirement homes left for Britain’s 2 million elderly, making the need to increase the stock of retirement housing more urgent than ever before.
There are currently 24,900 retirement housing developments in England and Wales, comprising 720,000 units. Crucially, only 186,000 retirement housing units (26%) can be owned.
A new analysis by Inspired Villages shows that there are currently 105 retirement housing units per 1,000 older homeowners in England and Wales, with only 27 per 1,000 that can be owned rather than rented.
Put another way, about 25% of older people say they’d like to buy a retirement property, but there are currently only enough units for 2.7% to do so.
Michael Voges, Executive Director of Associated Retirement Community Operators, said, “For many years, the UK has suffered from a chronic lack of supply in the specialist retirement sector; severely trailing countries like the United States, Australia and New Zealand in meeting the housing and lifestyle needs of an aging population.”
There is not only significant interest in owning retirement housing among older homeowners, but based on their level of equity, there is also genuine potential to do so.
While prices differ by region, the New Policy Institute and others have stated that an older person generally needs a bare minimum of £175,000 to have a chance of buying a retirement property. Figures from the Land Registry and the ONS show that roughly four million people meet this minimum requirement.
If we increase the threshold to £300,000, which in many places is enough to afford a more aspirational retirement property with at least two bedrooms, 1.5 million older people still qualify.
There is therefore not only significant interest in owning retirement housing among older homeowners, but based on their level of equity, there is also genuine potential to do so. The problem, however, is that there is currently a woefully small number of retirement housing units to meet this demand.
A residential research paper on retirement housing published by Knight Frank in 2016 examined the pipeline of new retirement housing being built in the UK. It showed that only 3% of new housing which has been granted planning permission is specifically for the elderly.
Knight Frank estimate that around 25% of over-55s want to move into some sort of retirement housing in the future. This equates to around 2.5 million households.
Housebuilders are responding to demand. Places for People and Octopus Healthcare recently joined forces to launch a new £200m business, Liberty Retirement Living, which plans to deliver 25 retirement villages and 2,700 units over the next five years.
“We’re currently invested in more than 200 healthcare facilities across the UK and we see retirement villages as probably the largest growth property sector in this country,” said Shay Ramalingam, Director at Octopus Healthcare, said. “Not only are we living for longer, but our quality of life as we age is improving, meaning we want more from the places we live.”
David Cowans, Group Chief Executive, Places for People, added, “We know that in order to meet the needs of our growing older generation, we need to change the way we plan our cities, towns and villages, including paving the way for new retirement villages.”
On average, 7,200 new homes are being built each year. If we keep building at this rate, Inspired Villages estimates that by 2039 we will have around 894,000 homes – this could be considered a ‘business as usual’ scenario.
However, the older population is growing more quickly than ever, so if we are to maintain the current supply of 7% of the older population then we need to build 16,600 new homes each year – double the current rate. Under this ‘maintenance’ scenario, the housing stock would reach 1,109,000 homes by 2039.
In some areas of England and Wales, a 20–40% increase in the supply of retirement housing will be needed, but in others it could be as much as 124% (i.e. more than double today’s supply).
If we carry on with business as usual, building 7,200 retirement housing units per year, we will fall an astounding 1.8 million homes short of an ideal scenario that might see potential right-sizing demand met.