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February 18th, 2022
Could retirement living be the answer to the UK’s ageing population and its housing needs? We explore the opportunity – for residents, businesses, and investors in more detail.
Between 2009 and 2019, the percentage of people aged over 65 in the UK grew by 23%, compared to overall population growth of 7%. 1 in 10 of those aged over 65 are still working, and around 37% are self-employed. But many live in houses that would be termed ‘under-occupied’ (some 55% of those aged 65 and over had at least two spare bedrooms according to the English Housing Survey), with the associated concerns about maintenance, community and security that can come with it.
It's where companies specialising in retirement housing can really make a difference says Dr Natalie-Jane Macdonald, a veteran of health and social care, with experience across the public and private sector. “More people are living longer, working longer and the period of what you might call healthy life years is also increasing,” notes the non-executive director of Riverstone, which provides exceptional residences for over 65s in prime central London. “People in their early to mid-60s can fully expect to have 20 years or longer of vibrant active life.”
And, she continues, while none of us can predict the future, “having good quality care within your home or the opportunity to combine a continued good existence with a sense of community, friendship and purpose with the backup of care should you need it, is very attractive.”
A global concept
It’s not a new concept. In the US, for example, 17% of people aged over 60 live in retirement housing; in Australia, the figure is 13%, and yet in the UK it’s only 1%. There are various factors behind that, says Macdonald. “It’s partly down to lack of availability, choice and awareness. Often the decision to move in later life is a distress or needs purchase, caused by ill-health, or bereavement – it’s very rarely seen as a positive.
“But good retirement living can provide support, community, independence and I think there’ll be a revolution in older age living over the next 10 to 20 years in the UK.”
Another factor is that retirement living in the UK hasn’t been prioritised in policy and is largely unregulated. “Encouraging housing with care for older people and legitimising some of the funding models that sit behind that, to give consumers confidence in it as an investment, has been lacking,” says Macdonald. “That’s something that’s beginning to change.”
Government task-force established
Following lobbying from companies like Riverstone and led by ARCO, which represents the UK’s Integrated Retirement Community sector, the Government has recently announced a task-force on housing for older people as part of its Levelling Up agenda.
With ARCO pushing to see policy developed in areas such as planning and regulation, tenure and funding, this could be a significant opportunity for the developing sector. “People are often suspicious and sometimes rightly so of concepts that are unfamiliar,” says Macdonald. “So being able to show that this is a solid way of being able to buy a lovely apartment and live the life that you want to live for a number of years, is important.”
Understanding the needs and anticipating the future needs of residents is what helps to make retirement living so attractive, explains Macdonald. “We undertake a lot of research on what people want from where they live – this includes experiencing nature, having their own front door but also the opportunity to interact with others, and the possibility of keeping active, both physically and mentally. We can also future proof the apartments that our residents will be living in in ways that aren’t obtrusive and obvious.”
Future growth opportunity
With costs covered by membership fees and a deferred fee based on sale price at the end of the tenure, uncertainty about how long you could afford to live in retirement housing could be a concern. It’s why potential residents, certainly at Riverstone, are encouraged to undertake a financial health and sustainability check before committing to purchase. “Our responsibility is to make it as easy as we can for them to do robust financial planning and to inform the assumptions that they're making about how long they might live at a Riverstone residence for, and what's important to them in relation to their family and inheritance, for example.”
While growth in asset value for Riverstone’s London apartments might not be an issue, it’s certainly a factor residents might want to consider. Having said that, as supply and demand look set to grow and retirement living gains in popularity, there are real opportunities for both private and institutional investors.
“I see this as a huge opportunity for those interested in investing in quality real estate and real estate with a significant purpose. It aligns absolutely with the trend of a growing older population and a demographic who want more choice about how they spend their older years. And it’s something we simply haven’t had in the UK in any meaningful way. I think it's very exciting for the future,” says Macdonald.
Partner – Cities, Infra & Sustainability
Director – Healthcare & Education
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