"When retirees sell their homes, a younger purchaser is likely to invest in and upgrade that property - including its sustainability credentials, thereby benefiting us all."
- Honor Barratt - Birchgrove
It’s no secret that Britain is in the midst of a senior living housing crisis, with recent CBRE research suggesting an undersupply of 614,000 mid-market senior living units nationwide.
The research also found that 62% of over-55s are open to moving into a senior living scheme in the future, but that the same amount (63%) of over-75s have yet to downsize from retirement. In essence, the majority of those approaching retirement are open to downscaling, but a lack of senior living housing is hindering retirees’ ability to move.
For baby boomers, and increasingly Generation X, reports such as these make grim reading.
After all, assisted living housing affords many elderly people a new chapter in life: a more manageable lifestyle, coupled with new social opportunities and numerous mental and physical health benefits. Ultimately, the majority of those who move into assisted living end up healthier, happier more active and less lonely than those who don’t.
The impact of the shortage of senior living housing reverberates beyond just the elderly themselves, too. At Birchgrove we know that for every resident that joins one of our communities, a property with on average 2.3 under-occupied bedrooms is freed up, thereby helping tackle the wider housing shortage and reducing the need to develop on greenbelt land.
It is also my strong belief that when retirees sell their homes, a younger purchaser is likely to invest in and upgrade that property - including its sustainability credentials, thereby benefiting us all.
To tackle the crisis, it’s time for a rethink. Yes, Britain desperately needs greater investment into and development of mid-market retirement housing units.
But what if the solution lies not just in the number of units being developed, but the model of ownership too?
Reading the headlines, you’d be forgiven for thinking Britain’s rental market is dominated solely by millennials struggling to get on the housing ladder. Yet demand for renting is skyrocketing amongst the elderly too, with the number of older renters set to surge from 400,000 (5.7%) today to over one million (11.5%) by 2033. In today’s environment, the traditional model of owning a retirement home simply doesn’t work for everyone.
First and foremost, renting enables retirees who have sold their family home to free up a considerable amount of equity – be it for themselves to invest or put towards travelling, or to financially support children and grandchildren.
We see that our community at Birchgrove benefit from this opportunity: out of the 240 residents across our developments, not one of them is sitting on an empty house.
Renting also removes the burdens and often unexpected expenses of home ownership and gives owners far more flexibility should their circumstances change. Furthermore, the rental model eliminates stamp duty and exit fee liabilities and means families aren’t saddled with trying to sell the property when the occupier passes away.
But increasing the supply of rental retirement communities means overcoming both the challenges facing the traditional buying market and some rental market-specific hurdles too.
Firstly, a shift in mentality is required. Owning a home has become an aspiration woven into the nation’s fabric; for many elderly people, the idea of shifting from ownership back to rental is seen as regressive, therefore.
While renting in retirement isn’t for everyone, the more retirees that successfully rent, the more retirees will consider, and potentially benefit from, the model. Doing so will take time, and requires us to be more flexible in our approach to home ownership in later life, however.
Secondly, the retiree BTR market urgently requires both greater private investment, and, by extension, more competition. It may seem strange for the CEO of a retiree BTR developer to be calling for more market competition, but the scale of growing demand means more players in the market are desperately needed than the handful that operate today.
Finally, the sector is also in real need of greater public sector assistance. Specifically, there remains a dearth of planning officers, and those in the job remain under-resourced.
The effect of this is very real: Birchgrove was established in 2017, and – due to a lack of planning progress – only anticipates reaching 1,000 units by 2027. Every day in 2024, 1,000 people in the UK will turn 80.
Therefore, by the late 2020s, our 1,000 units will be enough for one day’s increase in need, or 0.1% of the more than one million retirees predicted to want to rent by then. Planning isn’t just tomorrow’s problem, however: even today, it has taken two years between plans being submitted and a spade being stuck into the ground at one of our new developments.
This isn’t to be critical of our planning officers, at all. I am constantly amazed by their performance given the circumstances they find themselves in – in addition to a lack of resources, they are frequently facing hostile environments in the form of developers, local residents and the committee members themselves.
Labour’s recent promises to overhaul the planning system and to hire more than 300 public sector planners is welcome – as would be a commitment from the government to introduce a minimum (say 10%) of C2 housing future masterplans. Ultimately, however, it will take greater collaboration, investment, flexibility and ambition from across the whole industry to begin tackling Britain’s surging rental-in-retirement demand.