Retirement Housing UK Market Report, 2nd Edition

Publisher LaingBuisson Ltd.

Published May 01, 2022

SKU # LBU17759306

Description

Retirement Housing UK Market Report, 2nd Edition

LaingBuisson has published the second edition of Retirement Housing UK market report. This report looks specifically at specialist, purpose-designed, self-contained accommodation for over 55-year-olds and covers the breadth of the UK’s retirement housing market. The segments covered include age-exclusive ‘downsizer’ housing, retirement living and housing with care. Read together with the latest Care Homes for Older People UK market report, published in March 2022, it offers a complete overview of the accommodation and care options open to older people in the UK.

The retirement housing market has, anecdotally, experienced a strong rebound following the slump of the pandemic. It is highly attractive for investors looking for long-term yields. Several segments of the market look set to expand as individuals and commissioners look to alternative models for those with less acute care needs. Furthermore, there are opportunities both at the exclusive and more mass market ends of the market, with town centre developments being a possibility as retailers leave the high street.

Retirement housing, nevertheless, faces challenges. Image is one of them and to reach its full potential, this needs to change so that people view moving to purpose-built, age-appropriate accommodation as a positive choice, rather than a matter of last resort. The environment, social and governance (ESG) agenda is another, and while retirement housing enjoys good ESG credentials, and by that dint attracts investors, investment is also needed to update older stock to meet net zero. The key to growth appears to be diversity of choice to serve the wide range of needs and aspirations in its target market.

EXECUTIVE SUMMARY

1. MARKET

1.1 Market Definition

1.1.1 Other Terms

1.2 Market Size Volumes

1.2.1 Market Volume Growth

1.3 Market Segmentation

1.3.1 Housing Segments

1.3.2 Segmented by Private vs Social Landlord Tenure

1.3.3 Segmented by Owner

1.3.4 Segmented by Geography

1.3.4.1 Northern Ireland

1.3.4.2 Available Apartments per Capita by Region

1.4 Market Value

1.4.1 Methodology

1.4.2 Market Value Growth

1.4.3 Services

1.5 History

1.5.1 Public

1.5.2 Private

1.5.2.1 Volume Housebuilders Approach

1.5.3 Age-Exclusive Downsizers – ‘Lifestyle Living’ aka ‘Over 55s’

1.6 Design

1.6.1 Communal Facilities

1.6.2 Product Evolution

1.6.2.1 Car Parking

1.6.2.2 Heating

1.6.2.3 Wiring

1.6.2.4 Refuse

1.6.2.5 Storage

1.6.3 Housing our Ageing Population Panel for Innovation (HAPPI)

1.6.3.1 HAPPI 1

1.6.3.2 HAPPI 2

1.6.3.3 HAPPI 3

1.6.3.4 HAPPI 4

1.6.3.5 HAPPI 5

1.6.3.6 HAPPI 6 Housing for People with Dementia – Are We Ready?

1.6.3.7 HAPPI 7

1.6.4 Dementia Design

1.6.5 Mobility Aids

1.7 Care, Support & Services

1.7.1 Management Services/Estate Management

1.7.1.1 Staffing

1.7.1.2 Catering

1.7.2 Technology-Enabled Care Services

1.7.2.1 Resident Involvement

1.7.3 Care

1.7.3.1 Care and Retirement Living/Age-Exclusive Downsizer Schemes

1.7.3.2 Care and Housing with Care Schemes

1.7.3.3 Care Homes/Ageing in Place

1.7.4 Resales

1.8 Demand Drivers

1.8.1 UK Population and Demographic Change

1.8.2 2020 ONS Population Statistics Update

1.8.3 Life Expectancy

1.8.3.1 Minority Communities

1.8.3.2 LGBTQ+

1.8.3.3 BAME

1.8.4 Pensioner Households

1.8.5 Marital Status

1.8.6 Dementia Prevalence

1.8.7 UK Housing Market

1.8.7.1 Housing Stock

1.8.7.2 House Prices

1.8.7.2.1 Wealth – Current Home Equity and Ownership

1.8.7.3 Older Movers

1.8.8 Customer Demand

1.8.9 Reasons for Moving

1.8.9.1 Community

1.8.10 Barriers to Moving

1.8.11 Marketing and Older Demographic

1.8.11.1 Ageism

1.8.12 Rented Housing Stock and Older People

1.8.12.1 Private Retirement Rental

1.8.13 Impact on the NHS and Society

1.8.13.1 Changes in Families’ Willingness to Provide Informal Care

1.9 Operating and Business Models

1.9.1 Business Model

1.10 Supply

1.10.1 Risk Appetite

1.10.2 Availability of Sites

1.10.2.1 Land

1.10.2.2 Site Availability/Sources

1.10.3 Co-Living or Blended Living

1.10.4 Planning

1.10.5 New Entrants/Barriers to Entry

1.11 Staffing

1.11.1 Sleep-ins

2. POLITICS AND REGULATION

2.1 Key Messages

2.2 Political Approach to the Sector

2.2.1 Levelling Up White Paper: Levelling Up the United Kingdom

2.2.2 2019 Election Manifesto

2.2.3 Queen’s Speech December 2021

2.2.4 Labour

2.2.4.1 National Care Service

2.2.5 People at the Heart of Care: Adult Social Care Reform White Paper

2.2.5.1 Investment/Commitments

2.3 White Paper – Planning for the Future

2.3.1 Levelling Up White Paper Reforming the Planning System in England

2.4 Legal

2.4.1 Leasehold

2.4.1.1 The Leasehold Reform (Ground Rent) 2022 Act

2.4.1.2 Service Charges

2.4.2 Freehold

2.4.3 Commonhold

2.4.4 Rental Market: Assured Shorthold Tenancies

2.5 Communal Areas: How to Fund and Legal Impacts

2.5.1 Event Fees and Law Commission Review

2.6 The Planning System

2.6.1 Housing Delivery Test

2.6.2 Housing Older People National Planning Guidance

2.6.3 National Design Guide

2.6.3.1 National Model Design Code Guidance

2.6.4 New Homes Bonus

2.7 Planning Gain/Use Classes

2.7.1 C2

2.7.2 Sui Generis

2.7.3 C3

2.7.4 PegasusLife Sidmouth Appeal

2.7.5 LifeCare Appeal

2.7.6 Rectory Homes Limited v Secretary of State for Housing, Communities and Local Government

2.7.7 2021 Appeals

2.8 Affordable Housing Section 106 Agreements

2.8.1 First Homes

2.8.2 Community Infrastructure Levies

2.9 Biodiversity Net Gain

2.10 Local Authorities

2.10.1 Local Authorities’ Policy to Older People’s Housing

2.11 Building Regulations

2.11.1 National Disability Strategy/Part M

2.11.2 Climate Change

2.11.2.1 Heat and Buildings Strategy

2.11.3 Future Homes and Buildings Standard and Changes to Building Regulations

2.11.4 Fire Safety and Grenfell

2.11.4.1 Building Safety Act 2021

2.11.4.2 Cladding

2.11.4.3 Protecting Leaseholders from Non-cladding Costs

2.11.5 Lifetime Homes Standard

2.12 Care Regulation

2.12.1 Health and Care Bill

2.12.2 The Care Act 2014

2.12.3 CQC Strategy 2021

2.13 Social Housing Regulation

2.13.1 REITs and Social Housing Sector

2.14 Other Regulatory Issues

2.14.1 New Homes Quality Code

2.15 Devolved Governments

2.15.1 Scotland

2.15.1.1 National Strategy for Older People

2.15.1.2 Planning

2.15.1.3 Legal

2.15.1.4 Social Care

2.15.1.5 Care Regulation

2.15.1.6 Retirement Housing

2.15.1.7 Social Housing Regulation

2.15.2 Northern Ireland

2.15.2.1 National Strategy for Older People

2.15.2.2 Planning

2.15.2.3 Legal

2.15.2.4 Social Care

2.15.2.5 Care Regulation

2.15.2.6 Social Housing Regulation

2.15.3 Wales

2.15.3.1 National Strategy for Older People

2.15.3.2 Planning

2.15.3.3 Legal

2.15.3.4 Social Care

2.15.3.5 Care Regulation

2.15.3.6 Social Housing Regulation

2.16 Trade Bodies

2.16.1 Associated Retirement Community Operators (ARCO)

2.16.2 The Association of Retirement Housing Managers (ARHM)

2.16.3 The Association of Residential Managing Agents (ARMA)

2.16.4 The Elderly Accommodation Counsel (EAC)

2.16.5 Homes for Later Living

2.16.6 National Housing Federation

2.16.7 The Retirement Housing Group

2.16.8 Other Relevant Organisations

2.16.8.1 Age UK

2.16.8.2 Better Retirement Housing

2.16.8.3 Centre for Ageing Better

2.16.8.4 Centre for Assistive Technology and Connected Healthcare

2.16.8.5 Centre for Policy on Ageing

2.16.8.6 The Equity Release Council

2.16.8.7 The Essential Role of Sheltered Housing (ERoSH)

2.16.8.8 The First-Tier Tribunal (Property Chamber)

2.16.8.9 The Housing and Dementia Research Consortium (HDRC)

2.16.8.10 Housing LIN

2.16.8.11 Housing Made for Everyone (HoME)

2.16.8.12 The Housing Ombudsman Service

2.16.8.13 The Local Government Ombudsman

2.16.8.14 The National Association of Almshouses/Almshouse Association

2.16.8.15 The National Innovation Centre for Ageing (NICA)

2.16.8.16 The Scottish Federation of Housing Associations

2.16.8.17 Telecare Services Association (TSA)

2.16.8.18 Homecare Association (formerly UKHCA)

3. PAYORS

3.1 Key Messages

3.2 Payor Overview

3.2.1 Pensions

3.3 UK Government Benefits Commonly Available to Payors

3.3.1 State Pension

3.3.2 Pension Credit

3.3.3 Housing Benefit

3.3.4 Attendance Allowance

3.3.5 Council Tax Reduction

3.3.6 Disability Living Allowance

3.3.7 Universal Credit

3.4 Social Care Funding

3.4.1 Care costs

3.4.2 ExtraCare Charitable Trust

3.4.3 Better Care Fund

3.4.4 Market Position Statement

3.5 Payment Models

3.5.1 Private Purchase Finance Options

3.5.2 Equity Release

3.5.2.1 Is Equity Release Reducing Demand for Downsizing to Release Capital?

3.5.3 Shared Ownership

3.5.4 Social Rent

3.5.5 Private Rental

3.5.6 Deferred Management Fees

3.6 Public Funding of Development

3.6.1 Local Authorities

3.6.2 Homes England

3.6.3 Care and Support Specialised Housing Fund

3.6.4 Step-up/Step-down NHS-Funded Apartments

4. MAJOR PROVIDERS

4.1 Key Messages

4.2 Total Older Peoples Housing

4.3 Active Developers in the Last Five Years

4.4 Housing with Care

4.5 Retirement Living

4.6 Age-Exclusive Downsizer

4.7 Operators

4.8 Care Providers

4.9 Housing Associations

5. INVESTORS AND FUNDING

5.1 Key Messages

5.2 Investors Overview

5.3 Investment Models/Funding

5.4 Investor Activity

5.4.1 Insurance/Pension/Fund Managers

5.4.2 Private Equity

5.5 Rental Secondary Market

5.6 Debt Finance

5.6.1 Shared Ownership

5.7 Housing Association Funding

5.8 For Profit Registered Providers/REITs

5.9 Valuation of Deferred Management Fees

5.9.1 Discounted Cashflow (DCF)

5.10 Investors

5.10.1 Legal & General

5.10.2 Lone Star

5.10.3 Goldman Sachs

5.10.4 Octopus Healthcare

5.10.5 Schroder Real Estate Capital Partners

5.10.6 Oaktree

5.10.7 Bridges Fund Management

5.10.8 The Carlyle Group

5.10.9 Heitman

5.10.10 Insurance Groups

5.10.11 Other Investors

6. MARKET POTENTIAL

6.1 Key Messages

6.2 Covid-19

6.2.1 Impact on Retirement Operators

6.2.2 Care Homes

6.3 Factors influencing the market

6.3.1 Demographics

6.3.2 Economy and Housing Market

6.4 Market Potential

6.4.1 Comparing to High Point of Late 1980s

6.5 Market Penetration

6.5.1 Total Market

6.5.2 Housing with Care

6.5.3 Retirement Living

6.5.4 Age-Exclusive Downsizer

6.5.5 Geographic within the UK

6.6 International Comparisons

6.6.1 New Zealand’s Retirement Villages Act 2003

6.6.2 New Zealand and Australia Market Size and Operators

6.6.3 United States

6.7 Market Forecast

6.7.1 Age-Exclusive Downsizer

6.7.2 Retirement Living

6.7.3 Housing with Care

6.8 Growth Constraints

6.8.1 Structural

6.8.2 Customer Demand

6.8.3 Developer

6.9 Opportunities

6.9.1 Older Person’s Housing Task Force

6.9.2 Integration White Paper

6.10 Conclusion

APPENDIX 1. GLOSSARY

APPENDIX 2. REGULATORS

APPENDIX 3. TRADE BODIES

APPENDIX 4. PROVIDER PROFILES

APPENDIX 5. SELECTED BIBLIOGRAPHY

APPENDIX 6. FINANCIAL APPENDIX

LIST OF TABLES

Table ES1 Market penetration rates, UK, %, 2021

Table ES2 Household projections by age of head of household, all types, mid-2018 and mid-2043, England

Table 1.1 Definitions of retirement housing terms

Table 1.2 Other terms

Table 1.3 Number of new builds, sites and apartments, 2009–2021

Table 1.4 Average site size by product, 2021

Table 1.5 Housing for dementia, recommended standards

Table 1.6 TAPPI Principles

Table 1.7 Household projections by age of head of household, all types, England, 000s, mid-2018 and mid-2043

Table 1.8 Single-person household projections by age of head of household, all types, England, 000s, mid-2018 and mid-2043

Table 1.9 Factors that influenced decisions to move to a community

Table 2.1 Comparison of the manifestos of the main UK political parties

Table 2.2 Tenancy regulation

Table 2.3 Rental agreement types, UK, 2019

Table 2.4 Older people’s housing sector ranked by number of units

Table 2.5 Regulations of Social Housing rating standards

Table 2.6 Other regulatory issues

Table 2.7 Care Standards comparison

Table 2.8 ARCO Code

Table 3.1 Age distribution of Housing with Care residents, 2021

Table 3.2 Gross weekly income distribution of older households in Great Britain

Table 3.3 Retirement housing resident benefits and Welfare Reform Act changes

Table 3.4 North Yorkshire Council’s market position statement as an example of an MPS which includes extensive reference to Extra Care

Table 3.5 Social Rents

Table 3.6 Examples of high-end rental facilities

Table 4.1 Major Housing with Care sector players, total stock, UK, 2021

Table 6.1 Factors influencing the market

Table 6.2 Market penetration rates, percentage, UK, 2021

Table 6.3 Supply and market penetration of Housing with Care by region, UK, 2021

Table 6.4 Housing with Care international market comparison

Table 6.5 New Zealand Housing with Care market size, 2012–2020

Table 6.6 Major operators, New Zealand, Australia, United States

LIST OF FIGURES

Figure ES1 Occupants of housing with care units and occupied beds in residential settings for older people and dementia, UK, 1990–2021

Figure ES2 New sites, total market, 1960–2021

Figure ES3 Top ten developers, apartments developed, UK total market, 2017–2021

Figure 1.1 Older people’s housing, price and care diagram

Figure 1.2 Age-Exclusive Downsizer housing, Retirement Living and Housing with Care, total number of apartments

Figure 1.3 New sites, total market, 1960–2021

Figure 1.4 Site and apartment development, 2012–2021

Figure 1.5 Total retirement housing units, UK, 1960–2021

Figure 1.6 Number of houses completed, by tenure, England, 1949–2021

Figure 1.7 Annual change in the number of apartments built each year, 2008–2021

Figure 1.8 Total number of sites and apartments, 2021

Figure 1.9 Private/social landlord split, 2021

Figure 1.10a Housing with Care, number of units, 1960–2021

Figure 1.10b Housing with Care, number of units and number of residents, 2021

Figure 1.11 Older peoples housing sites by operator and region

Figure 1.12 Units by nation, apartments per 1,000 population aged 75+, mid-2020

Figure 1.13a Available apartments for rent per 1,000 population (75+) per county, England, 2020/21

Figure 1.13b Available apartments for sale per 1,000 population (75+) per county, England, 2020/21

Figure 1.14 Total number of apartments by region, 2021

Figure 1.15 Naturally Occurring Retirement Communities (NORCs) locations

Figure 1.16 Average prices of retirement housing properties, new sales in England and Wales, 2008–2021

Figure 1.17 Gross Development Value of all new stock additions valued at the average selling price as derived from market sale units, 2008–2021

Figure 1.18 Housing with Care service revenue, UK, 2021

Figure 1.19 New sites by type of housing, UK, 1960–2021

Figure 1.20 New sites, by product type and number of bedrooms, 2021

Figure 1.21 Number of sites by number of storeys, 2021

Figure 1.22 Share of premium facilities

Figure 1.23 Apartments per site by year built, 1960–2021

Figure 1.24 McCarthy Stone service charges, 2019/20

Figure 1.25 Value of all resold properties valued at the average selling price as derived from market resale units, 2008–2019

Figure 1.26 Average prices of retirement housing properties, resales in England and Wales, 2008–2019

Figure 1.27 Annual underlying demand for care for older people, UK, 2000–2040

Figure 1.28 Pensioner population forecast, number of pensioners, UK, 2020–2037

Figure 1.29 Projected births, deaths and net migration, 000s

Figure 1.30 UK population by age, 000s

Figure 1.31 Projected population growth (CAGR) by age groups, UK, 2020–2025

Figure 1.32 Age 65+ population as percentage of total population, 2005–2021

Figure 1.33 Life expectancy at 65 by gender, number of years, UK, 2002 vs 2020

Figure 1.34 Life expectancy at 65 by region, number of years, UK, 2021

Figure 1.35 Healthy life expectancy at 65, number of years, UK, 2016–2018

Figure 1.36 BAME Population 75+ England

Figure 1.37 Projected household volumes, age of head of household, England, mid-2018 and mid-2043

Figure 1.38 Pensioners1 by marital status, England, 2002–2020

Figure 1.39 Pensioner households, UK, 2019–2020

Figure 1.40 Estimated number of people living with dementia, UK, 000s, projections 2014–2051

Figure 1.41 Dementia prevalence by age group, late onset only, UK, estimated percentage, 2014

Figure 1.42 Housing supply, England, 2010–2020/21

Figure 1.43 Average house prices, UK, and ratio of house prices to disposable income indexed to 1983 = 100, 1968–2020

Figure 1.44 Average house prices by region, 2021

Figure 1.45 Household net property wealth for people aged 65+, Great Britain, 2018–2020

Figure 1.46 Individuals by age, by household net property wealth, Great Britain, April 2018 to March 2020

Figure 1.47 Tenure of household reference individuals aged 65+, England, 2019/20

Figure 1.48 Percentage of households in each HRP age category which moved in 2019/20

Figure 1.49 Proportion of households with HRP aged 55+ which moved in last year, over time

Figure 1.50 Recent movers with HRP aged 55+ by current tenure over time

Figure 1.51 Self-reported reasons for moving

Figure 1.52 Annual NHS savings made due to retirement living

Figure 1.53 Timeline from negotiation over land to final sale of site, McCarthy Stone development time, UK, 2016

Figure 1.54 Females aged between 25 and 54, UK, 2020–2040

Figure 1.55 National Living Wage vs median care worker wage, England, £/hr, 2005–2026

Figure 2.1 Timeline of government reviews of ground rents and event fees

Figure 2.2 Housing with Care planning application volumes, 2017–2021

Figure 2.3 CQC ratings

Figure 2.4 General CQC ratings for domiciliary care vs Housing with Care providers, December 2021

Figure 2.5 CQC inspection prioritisation

Figure 3.1 Average yearly gross income of all pensioner households

Figure 3.2 Distribution of savings and liquid investments among pensioner households, UK, 2019/20

Figure 3.3 Deferred management fees, UK, 2020/21

Figure 3.4 Government-backed extra care schemes by region, England only, funded 2005–2021

Figure 4.1 Top ten apartments developed, total stock, UK, 2021

Figure 4.2 Top ten apartments operated, total stock, UK, 2020 and 2021

Figure 4.3 Top ten private developers, total stock, UK, 2021

Figure 4.4 Top ten developers, apartments developed, total market, UK, 2017–2021

Figure 4.5 Provider roles across sites

Figure 4.6 Top ten Housing with Care Developers, total stock, 2016–2021

Figure 4.7 Top ten developers, Age-Exclusive Downsizer apartments developed, total stock, UK, 2021

Figure 4.8 Top ten operators, apartments operated, 2017–2021

Figure 4.9 Top ten care providers, apartments by care provider, total stock, UK, 2021

Figure 4.10 Top ten care providers, apartments by care provider, total stock, UK, 2017–2021

Figure 4.11 Top ten social landlord providers, total stock, UK, 2021

Figure 5.1 Deferred Management Fee cashflow

Figure 6.1 Addressable market, all types of retirement housing, UK, 2020/21

Figure 6.2 Addressable market, Housing with Care only, UK, 2020/21

Figure 6.3: Bed capacity gains and losses from new registrations, closures and other net changes including extensions and reductions in registered beds in existing homes – all independent and public sector care homes for older people and dementia (65+), UK 1990 – December 2021

Figure 6.4 International comparison of beds in residential long-term care facilities per 1,000 population aged 65 and over, 2007–2018

Figure 6.5 Percentage of each age group that are homeowners, England, 1981–

Figure 6.6 Median equivalised household disposable income of retired individuals, UK, 1997–2019/20

Figure 6.7 Residential property sales compared to the number of retirement new builds, England, 2005–2020/21

Figure 6.7 Volume of demand (occupied beds) for care in residential settings for older people and dementia (65+), compared with the size of the population aged 65+, UK, 2000–2019

Figure 6.8 Available apartments per 1,000 population (75+) per county, England, 2020/21

Figure 6.9 Retirement housing and care in UK and US

Figure 6.10 Occupants of housing with care units and occupied beds in residential settings for older people and dementia, UK 1990–2021

Figure 6.11 Number of 75+ households in Housing with Care properties, UK, 2019–

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