The Right-Size Report

 

Now that the average 65-year-old can expect to live another twenty years, the question of where to spend them is more important than ever.

One option is staying put in the homes they’ve probably lived in for decades, but “ageing in place” isn’t always a sensible option in the long-term. Homes and gardens can become unmanageable, and outside help from domiciliary nurses and care workers, whilst hugely valuable in easing the strain, can’t be instantly on-hand in the event of an emergency.

At the other end of the spectrum is moving to a care home, where assistance from a nurse is available around the clock. Care homes are an important option for individuals who require a very high degree of support, but for most people over the age of 65, they are understandably seen as the last option, not least because they are so expensive. Research by Knight Frank shows that the average weekly cost of a room in a nursing home in 2016 was £726 (£897 in the South East).

Between the extremes of staying put and care homes lies specialist retirement housing. These are self-contained flats, bungalows and houses that are built with older people in mind, with their own front doors and access to communal areas, social activities and varying levels of support services. Many modern retirement developments have care on site, allowing older people who don’t need specialist dementia support to avoid traditional care homes altogether.

Surveys by YouGov and Knight Frank suggest that one-third of older people would like to “right-size” by moving into specialist retirement housing. That means downsizing their property without feeling like they are downgrading their retirement. The key difference between downsizing and right-sizing is that the latter feels like an even more positive choice, as it considers more than just the size of the new property. Access to local amenities, opportunities to maintain an active social life, and the ability to increase support and care in line with residents’ changing needs all contribute to making the new home feel right.

Shelter and other charities have stated that right-sizing in this way can improve older people’s health and wellbeing, and that we should therefore ensure there are ample opportunities for those aspiring to own a home more suitable to their needs.

Given that one-third of older people would consider right-sizing, we might expect to have a large stock of retirement housing available for purchase. An inquiry by the All Party Parliamentary Group on Housing and Care for Older People reported that other countries have met this challenge: In the United States, 17% of older people have right-sized by moving into specialist retirement communities, and Australia isn’t far behind, at 13%. But how does the UK compare?

Inspired Villages has compiled an exhaustive database of every retirement property in England and Wales for comparison against the population of older people who can potentially move into one.

Using this data, we’ve mapped older people’s right-sizing opportunities in more detail than ever before, to show the distribution of stock today and what it could look like in twenty years in response to a rapidly ageing older population.

We’ve also considered the quality of existing retirement housing by determining how many units can be owned (as opposed to rented) and have two or more bedrooms. Retaining ownership in one’s home and having enough space for visitors to stay over are hugely important features for older people who are considering right-sizing.

Before we can assess whether or not there is a shortage of retirement housing in the UK, we need to build a picture of where people live and where the housing is located. Over-65s who own their homes without a mortgage have the greatest opportunity for right-sizing, so that’s where we’ll begin. In England and Wales, that includes 7 million people.

 

 

Using census data, we mapped the varying levels of outright homeownership among people aged 65 or over across England and Wales, which includes 67% of older people. According to the educational charity Demos, in England alone their unmortgaged housing wealth is worth £1.23 trillion, with nearly half being in three-bedroom properties and 20% in four-bedroom properties.

The geographical distribution of outright homeownership among older people is patchy, with the lowest rates found in London boroughs like Tower Hamlets (22%), Hackney (25%), and Southwark (27.2%). Outside London, the lowest rates are in Manchester and Hull, at 44.9% and 51% respectively.

Broadland, in Norfolk, which has previously made the news for having the lowest level of violent crime in the UK, has the highest rate of homeownership among older people, at 79.2%.

Broadly speaking, coastal areas in the South and East of England have the highest rates of outright homeownership among older people, while the North East has the lowest.

This is a reflection of the housing market in general: A briefing paper published by the Centre for Housing Research at St. Andrews University found that only 3% of housing wealth is in the North East, while 40% is located in London and the South East.

Moving home can be a stressful experience for any older person, but it is especially difficult for those in poor health. Data from the Department of Health showed that by 2018, there will be 50 percent more people with three or more long-term health conditions living in England than in 2008. This is another strong justification for more older people living where support is available whenever it’s needed, rather than only when it is booked in the form of occasional domiciliary care.

When we map rates of poor health among older people who own their homes outright, we see a very different pattern to homeownership overall. Only 6.4% of older homeowners in the South East were in poor health at the time of the last census, compared to 8.6% in the North West and 11.3% in Wales – the highest of any region. In places with higher than average levels of poor health, there is an even stronger need for retirement housing that offers care and support services on-site.

A large proportion of older people in Wales and the North of England do not have enough, or any, equity in their homes to purchase a retirement property and will therefore be forced to rent.

 

 

The chart above combines house price data from the Land Registry with current population estimates from the Office for National Statistics to quantify the number of older people in each region of England and Wales who have £175,000+ or £300,000+ of equity in homes they own without a mortgage.

While prices differ by region, the New Policy Institute and others have stated that an older person generally needs a bare minimum of £175,000 to have a chance of buying a retirement property. The figures show that roughly four million people meet this minimum requirement.

If we increase the threshold to £300,000, which in many places is enough to afford a more aspirational retirement property with at least two bedrooms, 1.5 million older people still qualify.

There is therefore not only significant interest in owning retirement housing among older homeowners, but based on their level of equity, there is also genuine potential to do so.

The problem, however, is that there is currently a woefully small number of retirement housing units to meet this demand.

 

 

The maps above use data from the Elderly Accommodation Counsel’s (EAC) housing directory to create the most up-to-date snapshot of retirement housing across England and Wales. The data, which represents the most complete public record of retirement housing stock available, includes all types of specialist retirement housing for older people, excluding care homes. It is divided into properties that can be owned and those that can only be rented.

There are currently 24,900 retirement housing developments in England and Wales, comprising 720,000 units. Crucially, only 186,000 retirement housing units (26%) can be owned.

This is a significant problem, because many older homeowners don’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

The distribution of retirement housing depends heavily on whether the units can be owned or rented. The South East has the highest proportion of retirement properties that can be owned, at 43%, followed by the South West (34.2%), the West Midlands (29.4%), and the East of England (29.3%). The North East has the lowest, at 12.4%, followed by Wales (14.6%), and Yorkshire and the Humber (17.1%).

Only five local authorities appear in the top 20 rankings for the most ownedand rented retirement housing units: Birmingham, Cornwall, Leeds, Wiltshire, and Wirral.

In all other respects, the distributions of owned and rented retirement homes differ strongly.

As with our map of homeownership rates, which showed that older people in urban and some northern areas are less likely to have the equity to support right-sizing, the pattern of supply of owned homes shows that older people’s aspirations may not be served equally well across the country.

To build a more detailed understanding of supply, we must also look back at the history of retirement housing and compare the quality of owned and rented properties in terms of their age and size.

 

 

Charting the history of retirement housing builds over the last six decades reveals why 74% of the current stock are for rental rather than ownership.

Between 1960 and 1983, almost all new units were rented accommodation organised by local authorities – it was only in 1984 that more units for ownership began to be built.

The build rate of retirement homes for both tenures peaked in 1989 at 29,582 homes a year, then dropped dramatically and has not recovered since.

Since 2000, whilst the older population has grown, as few as 5,500 retirement housing units a year have been built on average.

The rate of building has picked up in the last five years to around 7,200 homes a year, but it is still well below the pace set 30 years ago. Since the turn of the century, retirement homes for ownership have been built at a faster rate than rental homes but the legacy of retirement housing means that it will take a long time for the stock of owned homes to catch up with rented. In fact, based on the ratio of new builds between 2013 and 2016, if nothing changes, the number of owned properties won’t match the number of rentals for another 50 to 85 years. Clearly, a more radical solution is needed than simply continuing as we are.

The history of retirement housing tells us not only that there are fewer owned homes than rented, but also that owned homes tend to be more recently built. The age of properties will be an important “pull” factor in encouraging older people to right-size, and it therefore seems that owned homes are also more likely to have a level of quality that better meets older people’s aspirations.

Another measure of housing quality important to older people is how many bedrooms a property has, and this too differs by tenure type.

 

 

Surveys conducted by YouGov and the Joseph Rowntree Foundation have shown that most older people will not consider right-sizing to retirement housing unless they can move somewhere with at least two bedrooms.

By analysing the advertised specifications of retirement housing developments in EAC’s database, we can see that owned developments are significantly more likely than rented developments to contain homes with two or more bedrooms.

This has been the case since at least 1960, but has become more pronounced over the last few decades.

In 2017, 94% of owned retirement housing communities have two bedroom units, compared to 48% of rented developments.

Overall, 56% of developments contain homes with two or more bedrooms.

It seems clear, then, that owned properties tend to be better quality homes than rented ones for older people who would consider right-sizing. They are newer and have enough bedrooms. But compared to rented homes they are few and far between.

These results shed extra light on the deficit of owned homes across England and Wales that we mapped above. To build a definitive picture of the current state of retirement housing, however, we must combine demand and supply by mapping the number of homes available per older homeowner across the country.

 

 

Combining the EAC retirement housing data with the latest population estimates for people aged 65 or over reveals where in England and Wales the supply of retirement housing is highest and lowest relative to the number of older homeowners.

Our analysis shows that there are currently 105 retirement housing units per 1,000 older homeowners in England and Wales, with only 27 per 1,000 that can be owned rather than rented.

Put another way, these numbers highlight the retirement housing shortage more clearly than ever before: About 25% of older people say they’d like to buy a retirement property, but there are currently only enough units for 2.7% to do so.

By combining the distribution of owned and rented supply into one map, we can learn even more about where the supply is best met and how the quality differs.

Sixteen of the 20 local authorities with the greatest supply of owned retirement housing are in the South, with Portsmouth ranking higher than any other local authority, at 90.2 per 1,000 older homeowners. Warwick is the only location in the Midlands to rank in the top ten, at 69 per 1,000.

There are many places in the East Midlands and regions further north that have a reasonable supply in general, but with a mix predominantly comprised of rented homes. They are therefore relatively unappealing to many potential right-sizers. There are few places in the country with a high supply of both rented and owned homes (shown in dark green in the map above).

 

 

Home services that help older people stay independent, sociable, and cared for can be found on-site in many modern retirement villages, but for people continuing to live in general housing, they must be provided by external parties.

To gauge the availability of these services, we have compiled a comprehensive data set of 8,700 businesses and charities across the country that cater for older people’s needs. They include mobile hairdressers, meals on wheels, day centres, social and lunch clubs, plus dozens of other amenities. Mapping their prevalence relative to the number of older people shows that, as with the distribution of owned retirement homes, supply is lowest in Wales, the North East and areas bordering Yorkshire and the East Midlands. This compounds the disparity in opportunities for older people throughout England and Wales and emphasises the fact that comfortably ageing in place isn’t as easy as simply staying put in their homes forever. A better solution is retirement housing that has these essential services built-in, but as we’ve seen, they are in seriously short supply.

Building more retirement housing at today’s rate won’t be enough to solve the supply issue, because Britain’s older population is growing, as is demand for an aspirational option in the Goldilocks zone between ageing in place and residential care homes.

The map and table below show for the first time where in England and Wales retirement housing development needs to increase the most by 2039 to maintain today’s level of supply.

 

 

Today there are around 720,000 homes across various retirement housing types, enough for 7% of the older population (or 105 homes per 1,000 older homeowners).

On average, 7,200 new homes are being built each year. If we keep building at this rate, we estimate that by 2039 we will have around 894,000 homes – this could be considered a “business as usual” scenario.

But the older population is growing more quickly than ever, so if we are to maintain the current supply of 7% of the older population then we need to build 16,600 new homes each year – double the current rate. Under this “maintenance” scenario, the housing stock would reach 1,109,000 homes by 2039.

In some areas of England and Wales, a 20–40% increase in the supply of retirement housing will be needed, but in others it could be as much as 124% (i.e. more than double today’s supply).

The required increase is greatest in the Southern (including London) and Eastern regions of England, with a particular focus on the East Midlands and East of England. Some of the local authorities outside London most in need of new housing include Milton Keynes (104% increase), Slough (86% increase) and Northamptonshire (75–80% increase).

Future efforts to build housing will be a driver of population growth as people move to occupy new homes, but the map we present shows our best and latest information on what retirement housing is needed to maintain today’s supply.

 

 

In Australia, 13% of the older population live in specialist retirement housing. That is almost twice the current supply of 7% in the UK. To catch up with Australian supply, we would need to build 57,682 homes each year to generate a total housing stock of 2,055,000 homes by the year 2039.

The United States has enough homes for 17% of the older population. To catch up with this level of supply, we would need to build 85,174 homes each year to generate a total housing stock of 2,687,000 homes by the year 2039.

If we carry on with business as usual, building 7,200 retirement housing units per year, we will fall an astounding 1.8 million homes short of an ideal scenario that might see potential right-sizing demand met.

Even if we double our current rate of building to arrive at the “maintenance” scenario, we will still fall short by as many as 1.5 million homes. Clearly, increasing the opportunities for older people to right-size in the UK is an uphill challenge.

Looking Forward to the Future

Retirement homes built in recent years are more attractive to potential right-sizers than the uninspiring one-bedroom rented properties that dominated supply in the ‘70s and ‘80s. But there are still nowhere near enough attractive retirement homes for ownership being built. We’ve seen that the current supply and future pressure on supply vary substantially across the country, but the overall message is clear: we need more—and soon.

The Government’s recent housing White Paper, entitled “Fixing Our Broken Housing Market”, said very little about what can be done to incentivise older people to move out of their current homes and into housing that not only feels right today, but also in ten, twenty, or thirty years’ time (for instance, a proposal to reduce stamp duty was much-anticipated but conspicuously absent).

Instead, the paper mostly spoke in the future-tense, about conversations that will be had on housing for older people, rather than what strategies have finally been decided. After such a long wait, it ended up feeling frustratingly fuzzy.

The hope of Inspired Villages is that our maps and analysis of the current retirement housing deficit will bring the issue the undivided attention it deserves.

An unprecedented level of investment in retirement housing is needed. We’ll know we’re moving in the right direction when the prospect of living in a retirement community feels more like an exciting opportunity than a daunting uncertainty.

Inspired Villages’ developments in Warwickshire and Cheshire meet the growing local demand for retirement living and offer a life less ordinary for today’s older generation through the Continuing Care Retirement Community concept (CCRC).

CCRC is relatively new to the UK and offers a unique combination of independence and security of lifestyle within a socially active and supportive community. The result is that older people with a range of abilities and disabilities are able to continue to live in their own space, supported by a comprehensive and flexible network of personal care services and activities.

For press enquires related to the Right-Size Report, please email[email protected]