How a retirement housing dividend can help level up the country

COMMENT: Many people think the housing crisis benefits older people, who are more likely to own their homes. But in reality, it is being compounded by a shortage of retirement homes. Part of the solution must come from housebuilding by local authorities, but their ability to do so is severely restricted. Net local government spending on services in England fell by 18% between 2010 and 2020, while falling revenue during the pandemic has left councils facing unprecedented challenges in meeting the needs of local people. But a new paper by The Social Market Foundation, supported by Kajima, shows the government and local authorities can meet the challenge of an ageing population while reaping clear financial and social rewards. Specifically, they need to build more houses directly aimed at older people. Silver pounds What are the gains? First, freeing up family homes. The number of people over 65 is expected to rise by 7.5m to 8.5m in the next 30 years. Many live in houses that are too large for them, with more than 3m family homes thought to be under-occupied in this way. Expanding retirement housing would combat under-occupation, free up homes for young families and reduce pressure on other local authority housebuilding. There are also mental and physical health gains. The UK’s current housing stock does not meet the physical and mental health needs of its ageing population. The SMF estimates as many as 2m older people are suffering as a result. More retirement housing, with smart safety features and a community focus, would help combat loneliness and unnecessary deaths from falls and accidents. This, in turn, would save money for local health services. Next, there is increased ‘silver pound’ spending. Retirement housing can contribute to the government’s levelling up goal of regenerating urban centres by harnessing the spending power of older people. Over-65s households spend more than £170bn a year, and this silver pound spending power is forecast to grow by a further 81% by 2030. Building high quality retirement housing in town and city centres would bring more older people to these urban centres, and give a significant financial boost to local businesses on the high street. Finally, there are community hub benefits. Housing with care schemes often include communal facilities – a café, a shop, perhaps even a library or gym. These facilities are often accessible not just to residents, but also to local communities. Creating a community hub around a retirement living development can be a cost-effective way for authorities to deliver local services. Skills and experience The government has an opportunity here to solve a societal problem, achieving exactly what it set out to do in the Levelling Up paper – a national retirement housing strategy can deliver vital physical, social and human capital, while also creating a substantial monetary benefit from the development of retirement housing. The SMF argues that Homes England, for instance, which already provides funding programmes to stimulate housing-led developments, could lead efforts by delivering grants that promote the wider benefits of retirement housing. Some local authorities are already beginning to explore innovative funding models for delivering housing for retirees. In Newcastle, for example, the City Council has identified an acute need for affordable, specialist housing for older people. Kajima has brought together a consortium of private investment, development expertise and built environment specialists to deliver affordable housing for the council while minimising their initial financial outlay. Newcastle’s council-owned land was leased to the consortium, which provided the new homes. They were then leased back to the council for a period of 40 years. When this ends, the ownership of all properties reverts to the council. This so-called annuity leaseback model, and others like it, could help local authorities across the UK meet their housing targets. And, in turn, private developers like these have the skills and experience necessary to deliver the new, high quality retirement housing that society needs. They just need central and local governments to help them do it. Kirk Taylor is head of development at Kajima Europe Image © Paul Cooper/Shutterstock