The next hot housing topic for government should be the top of the ladder, where millions of older people want to downsize but are stuck because of a lack of high-quality, suitable dwellings.
The cross-party think tank Demos found that 58% of over-60s are interested in downsizing and one in four is interested in specialist retirement property. But this end of the market has been neglected by government and developers.
While demand for downsizing is there, older people are much less likely to move than any other age group, in part because only 141,000 retirement properties have been built.
Few mainstream housebuilders are looking seriously at this sector. This is understandable – government is directing incentives to the other end of the market.
Could the government do more in this area? Yes, given the lack of supply and the benefits on offer. The number of people aged 85 and older is expected to more than double in the next 20 years to 3.5m, with a 50% increase in over-65s to 17.2m.
Better downsizing options could release millions of underoccupied family-sized homes onto local markets, stimulating housing chains and helping younger people move up the ladder.
There would also be a positive impact on the economy. The average McCarthy & Stone customer releases a dependent property worth £303,772 and around £60,000 in equity that they can spend as they wish.
More options would also help older people live healthier and happier and possibly longer lives, reducing their impact on the NHS and social care services. Loneliness, which has a big impact on wellbeing, could also be reduced. We recently undertook a study with Demos called Building Companionship: How Better Design can Combat Loneliness in Later Life, which found that loneliness looms large in the lives of older people.
More than a million older people reported that they always or often felt lonely, with London among the loneliest places in the UK. Demos found that 85% of homeowners in our retirement schemes said they found a sense of community among their neighbours, compared with just 51% of those in mainstream housing.
For the millions who do want to downsize, more could be done by government to stimulate supply in this part of the market. If it works for affordable housing, starter homes, PRS and student housing, why not here?
One of the biggest benefits of government action would be boosting supply.
The retirement sector currently builds around 5,000 private units a year, but with the right level of encouragement, this could grow to 20,000, and help government get closer to its objective of building 200,000 homes a year.
What could government do to increase supply? Ministers could replicate their starter homes policy to encourage delivery and new entrants into this sector. Stronger national and local planning guidance would help local authorities adopt a positive view on retirement housebuilding during planning, including, in particular, exemptions from CIL and affordable housing contributions.
There should also be local monitoring of supply, and larger sites should have space allocated for this type of housing.
On the demand side, an exemption from stamp duty for older people would also encourage them to make the jump, and result in a net profit for the Treasury via the new housing chains that otherwise wouldn’t be created.
We’re planning to invest £2.5bn in retirement housing, the largest investment in this sector.
But this will still deliver only around 3,000 new units each year. We need more new entrants, innovation, investment and support for this sector.
The rate of demographic change suggests there is little alternative.
Clive Fenton chief executive, McCarthy & Stone
