Is there an accommodation crisis for our ageing population?

A report issued this week by Irwin Mitchell/Cebr reveals that the UK’s ability to support our ageing population, in terms of their care and specialist accommodation needs, is reaching a crisis stage and, unless the government takes decisive action, we could hit a “tipping point” in 2029. There is no doubt that retirement accommodation with care is one of the most under-supplied areas of the UK housing market and as a nation we are not planning or building enough suitable accommodation to meet our demographic needs. The Office for National Statistics has predicted that the number of people in the UK aged 60 and over is expected to pass 20m by 2030 and, even now, more people in the UK are aged over 60 than under 18. The current estimated annual rate of delivery of new-build homes across all sectors of England is around 240,000, with only approximately 3% of these homes being specifically designed for the retirement housing sector. Put simply, there is a significant structural supply and demand imbalance in this sector. And the current planning system is not doing as much as it could be to alleviate the issue. A recent survey by Irwin Mitchell into whether local authorities have sufficiently planned for their elderly population’s accommodation needs found 45% of them wanting – with neither a clear elderly policy or specific site allocations. What are the consequences? This acute under-supply of purpose-built retirement accommodation (PBRA), including extra-care housing, retirement villages and assisted living schemes (all of which anticipate the future care needs of residents), as well as a projected shortage of care and nursing home spaces, will mean that a significant proportion of our elderly population will continue to live in houses they have likely lived in for decades and that are no longer suitable for them. This is as opposed to living in retirement communities, which are designed and built with adaptations to support independence. Research shows that those who live in this specialist form of accommodation are between 1.5 and 2.8 times less likely to have a fall than those living in homes without adaptations, thereby helping to reduce pressure on the NHS. A recent study found that NHS costs were reduced by 38% for those moving into retirement community housing, while NHS costs for “frail” residents had reduced by 51.5% after 12 months. So how can we increase the supply of PBRA? The following is a list of recommendations that we would like to see implemented. Reform the dysfunctional planning system Local authorities must be required to plan and allocate land for housing for the elderly, using more specific and detailed assessment of the housing needs of older people in a local area, across all types of housing and tenures to facilitate an increase in provision. And the penalties that councils face for failing to meet housebuilding targets should also apply for failures to meet targets for specialised housing – including retirement accommodation. At a national level, a certain percentage allocation should be given for retirement housing from the annual target of 300,000 new homes for England. Land supply Unlike pure care homes (use class C2), housing with care is often treated by councils as use class C3 development – standard residential housing. Developers are required to provide affordable housing and pay CIL, making development in this sector often uncompetitive against conventional housebuilders, particularly for sites in quality urban locations. The government should introduce a new planning use class aimed specifically at retirement housing. In the meantime, it should ensure that, when planners are determining applications, the unquantifiable net benefits of retirement housing are being taken into account (such as health and wellbeing benefits) and offset against affordable housing provision. We also think there should be nil or lower CIL rates for retirement housing. Waive or reduce SDLT on “last-time” moves This would financially encourage “right-sizing”. The move would also free up under-occupied family housing stock. If all those interested in moving into a retirement property were able to do so, research suggests that approximately 3.29m properties would be released, including nearly 2m three-bedroom homes. Promoting the mid-market In order for the sector to grow and gain real traction, there needs to be greater focus on the mid-market, which is where the majority of right-sizers reside. Flexibility of tenure While the government remains wedded to the promotion of home ownership through stimulus packages such as Help to Buy, the demand for rental models is growing. We believe this will also be the case for the retirement housing sector as: (a) right-sizers seek to distribute their wealth rather than tying it up in another property investment; and (b) the next generation of right-sizers will be more familiar with a rental model and there will be less stigma/resistance attached. Greater support is required from the government for rental models. Regulatory framework More mature retirement village markets, such as those in the US, Australia and New Zealand, all benefit from a statutory framework. This would be welcomed by investors in the UK sector, as well as responsible developers and operators of this accommodation. This would also give consumers a far greater degree of transparency in sometimes more opaque areas, such as event fees, which have historically caused the sector problems. Providing the right accommodation for our ageing population is essential if we are to avoid any tipping point and further strain on the NHS. There is a significant weight of institutional investment waiting to get into the retirement housing and care sector and the government should encourage, not thwart this. We hope the government takes on board our recommendations. Guy Sackett is a real estate partner at Irwin Mitchell and head of its retirement living and care sector