Spotlight on senior living: a market summary
Around the world, populations are rapidly ageing. This is creating significant societal shifts and challenges as people live, and work, longer, requiring new approaches to health and social care, and increasing the demand for appropriate housing solutions. These range from lifestyle-led retirement communities and co-living schemes which promote long-term independence, through to specialist care provision for older people later in life or with acute health needs such as dementia and other additional support requirements.
With the supply of housing more generally a critical issue nationwide, the UK faces its own particular challenges in meeting these emerging needs.
People aged 65 and over in the UK has increased by over 52%
The number of people aged 65 and over in the UK has increased by over 52% in the last 40 years, now exceeding 10 million and representing 18% of the population
(Savills)
2 million centenarians
Projections show that by 2110, the UK population could include almost 2 million centenarians
(ONS)
Demand vs supply
On the one hand, rising demand is creating significant investor interest. 38% of respondents to CBRE’s European Investor Intentions Survey reported an ambition to pursue senior living opportunities in 2024, while JLL global research showed a widespread desire from investors to increase their exposure in the sector this year.
On the other hand, supply continues to lag this demand and interest, creating significant pressures on both existing providers, health and care services, and individuals and their families as they navigate their later years within a challenging economic environment.
The number of people aged 80 and over is projected to more than double to over 6 million in the next 40 years
(Savills)
By 2037, almost 1.5 million households will be headed by someone aged 85 or over
Current level of provision
The Department for Levelling Up, Housing & Communities (DLUHC) launched the Older People’s Housing Taskforce to help address these issues, focusing on mitigating the rising costs of social care and ensuring that older adults have access to appropriate housing. Reviewing and implementing the Taskforce’s recommendations will be on the in-tray of the Labour government.
In the meantime, the Mayhew Review has been clear in terms of the scale of the issue at hand, including calling for the delivery of 50,000 new older people’s housing units a year (in contrast to the estimated 7,000 a year currently being delivered).
Make up of UK older people's accomodation types
[source: ARCO and HLIN]
Older people's accomodation by tenure
Source: Mayhew Review, Final Report 2022
But the issue is not limited to preparation for a future population which is older and has new requirements
Current level of provision
The current stock of specialist older people’s accommodation is ageing itself and beginning to creak. Only 12% of existing senior living housing stock was built post-2010. 69% is pre-1990 stock (Knight Frank).
At the same time, according to the British Property Federation, there are currently 12.9 million over-65s in the UK and only 602,633 senior housing units.
There is a clear need to upgrade the estate.
In addition, significant numbers of older people are living in insecure rental tenures, an issue which is likely to increase over time as outright home ownership dwindles. Ultra long mortgages of up to 40 years are being taken up by the market, which when taken together with the average first time buyer now being around 35 years old means many more people in the future may be well into retirement before they ever own their home fully.
Levers of change
A range of recommendations have been made across the sector to address these issues, many of which were echoed in our expert interviews for this project.
On the supply side, planning is frequently cited, with both the Mayhew Review and the BPF calling for reforms – including a new and consistent use class for senior living.
Meanwhile, to unlock more funding for delivery, The Housing and Ageing Alliance has called for Homes England to set aside 10% of its grant programme specifically for older people’s housing.
While demand is high in principle, there have been significant calls in the market to remove the friction that many older people feel when looking at their options to move. This includes suggestions such as waiving stamp duty for the over-65s who are downsizing (Family Building Society). A more fluid market has the added advantage of freeing up stock for younger buyers moving up the property ladder into larger family homes.
Innovative new models will also play a role in tackling not just supply, but the wider issues associated with ageing. Loneliness and isolation are critical issues among the elderly. For example, Age UK has found that over a quarter of a million over 50s in Scotland say they feel lonely all or most of the time. Housing and community building plays a key role in addressing this, with novel co-living and place-led solutions helping to tackle feelings of isolation
A maturing senior living market
While investor interest is high, emerging asset types are still nascent and returns are relatively unproven. As more evidence comes through and the market matures, institutional investor interest is likely to ratchet up further. As the Local Government Association notes, “Although the market is becoming more established, it is still very modest in size, with capacity for significant growth”.
New solutions are coming forward, including Integrated Retirement Communities (as coined by ARCO), and new public private partnerships and joint ventures which are creating both new opportunities for value creation and new options for older people.
Significant work has been undertaken in the market, and by policymakers, to raise awareness of these opportunities and the scale of need. Taken together with the wider and urgent requirement to significantly increase housing delivery more generally, tackling the issue of accommodation provision for our ageing population will likely both be a defining theme for the new government as well as a significant driver of investor and developer activity in the coming years.
Saffery LLP is a member of Nexia a leading, global network of independent accounting and consulting firms. Please see https://nexia.com/member-firm-disclaimer/ for further details.
Copyright | Legal | Modern Slavery Act Statement | Privacy Policy | Cookie Policy