The government is not doing enough to prepare for the rising number of people seeking retirement homes, argued an EG round table
A band of experts joined an Estates Gazette round table last week hopeful it would be a good day for the retirement housing sector. That same day chancellor George Osborne was preparing to unveil his spending plans for the next five years.
So when Gary Day, land and planning director at McCarthy & Stone, was asked to call housing and planning minister Brandon Lewis that afternoon, hopes were high that the call would herald government intervention to encourage more private housing provision for people aged 65 and older.
In the meantime, the experts said that the retirement home sector may soon be in crisis.
The government has prioritised the building of 400,000 affordable homes
for first-time buyers by 2020. But at the other end of the ladder, incentives are required to encourage older house-owners to downsize, and developers to deliver more age-appropriate stock.
“The age cohort of starter homes is far less than that of homes for older people, and within 10 to 15 years we might see retirement housing demand equalling today’s demand for starter homes,” said Michael Ball, professor of urban and property economics at the University of Reading.
Just 5% of Britons aged 65 and older are living in appropriate specialised retirement housing. This is despite a quarter of the 11m or so people in that age group expressing an interest in downsizing.
According to Neal Hudson, associate director in residential research at Savills, retirement housing supply over the past decade has been 7,000 homes per year. But to maintain existing levels of provision, given that the number of people aged 65 and older will rise by 2% annually over the next five years, double that amount is needed over that period.
An exemption from stamp duty for people buying a downsize home would be a welcome, albeit drastic, move from the government, as would a relaxation of the application of the community infrastructure levy, the experts agreed. A more simple measure would be to address local government plans.
“There are far too many local plans that don’t mention older people whatsoever. So when a provider such as McCarthy & Stone is looking to buy land and build, and if the needs of older people are not mentioned in the local plan, the authority has no incentive, or need, to look into it,” said Claudia Wood, chief executive of think tank Demos.
She added: “Including housing for older people in local plans would be a small-scale, cost-neutral step and would make a massive change.”
The issue continues to be ignored, said Day. “We have had an ageing population for a long time, so it amazes me that it is taking government and society so long to wake up to the housing implications of our ageing population and our planning system in particular.
“I still can’t quite understand why we don’t have more proactive policies in place and why local plans still seem to ignore this aspect of their responsibility.
He added: “When we lose sites, we lose them to car dealerships, McDonald’s outlets and storage companies, because they don’t face the land cost of a contribution to affordable housing. And in some instances, CIL charging schedules are lower for commercial employment-generating uses than they are for residential.
“We don’t operate on a level playing field when it comes to land acquisition,” he said.
McCarthy & Stone, which floated on the London Stock Exchange in October and has a 70% market share in this sector, has a “huge appetite for land”, Day said. But he lamented the lack of “genuine housing choice”.
The priority of the market has shifted from “needs-based” accommodation to houses for “aspirational downsizers”, he said. But a lack of choices away from the sheltered, warden-assisted care homes of the 1960s is hindering occupier movement.
Tom Scaife, a partner in institutional consultancy at Knight Frank, said the retirement market made a sound investment case. “The retirement extra-care market is immature, but it sits between a very mature residential market and a very mature care home market, so there is a great opportunity here for investors.
“And if we had more uniformity in the planning process, more focus on product and elderly care and the opportunity to understand what the market is, these, along with the size of the market, would prompt more investment.”
The debate also addressed the question of whether having a separate use class would give the market the right kind of boost. The experts agreed that although a change in attitude towards planning policy was needed, a separate use class might be damaging.
“Sometimes ambiguity is good, because it leaves the door open for negotiation,” said Day.
And as for that phone call?
“Ultimately, we were disappointed,” said Day.
The Spending Review announced 8,000 specialist homes for older people under the affordable bracket, but it is in the private sector that the greatest demand lies.
“We were excited but were labouring under a misapprehension,” he added.
After the Spending Review: the panellists react
Tom Scaife, Knight Frank
“There was nothing in the review to stretch the silver pound. The £1.2tn in unmortgaged housing stock owned by retirees in the UK is causing a blockage at the end of the housing chain and that is where the focus should be.”
Michael Ball, University of Reading
“Most of what the government did was to adjust demand in an upwards direction and hopefully the supply-side effect will come through. But governments have failed on this in the past. Also, land price pressures are likely to have a negative effect on the retirement homes market because developers will be competing for the same land as those in the first-time buyer market.”
Gary Day, McCarthy & Stone
“There are some positive steps here and we are keen to find out more about the proposed support for new specialist accommodation, but we need significant policy encouragement to address the needs of older homeowners wishing to downsize.“
Claudia Wood, Demos
“The Spending Review’s big-budget housing policies tackled the most visible issue: the plight of first-time buyers being priced out of the market. The serious problem – the desperate lack of suitable housing for older people – was overlooked again. This wasn’t a surprise.”
Neal Hudson, Savills
“Government housing policy is focused firmly on helping young people become owner-occupiers and this strategy will inevitably help some people. However, the housing market is complex and interlinked. Any kind of long-term solution should recognise this and ensure that we are building appropriate housing to meet the full spectrum of need and aspiration.”
The round table was held in association with McCarthy & Stone and hosted by Wragge, Lawrence, Graham & Co
