While much has been written about the challenges faced by first-time buyers struggling to get a foot on the housing ladder this summer, Advantage Home Construction Insurance looks at why developers are warning we can’t afford to ignore the housing needs of older people
Advantage Home Construction Insurance (AHCI) provides structural warranties for many of the UK’s leading developers, supplying cover for retirement developments, conversions, self-builds, student housing developments and a whole host of other projects nationwide.
As the Advantage team works closely with clients at every stage of their projects and the company directors have a background in property development, they take a (very) keen interest in how the UK housing market is evolving.
Looking beyond the headlines
With many mortgage lenders requiring bigger deposits following the coronavirus pandemic, publishers have understandably tended to focus on the “disappearance” of mortgages for first-time buyers, with the Telegraph stating in July that banks had “shut up shop” for those with low deposits.
However, while no one would dispute that young people seeking to buy their first home face a challenge, the nation’s biggest developers of retirement homes have warned that there is another demographic that we can’t afford to forget about – older buyers who are ready to downsize.
This summer, the nation’s three largest developers specialising in retirement homes urged the government to set a national target to ensure that 10% of new homes built are for older people.
There have been widespread calls for Boris Johnson to continue to prioritise housing. However, putting the focus specifically on housing for older people, in a letter sent to Number 10, McCarthy & Stone’s John Tonkiss, Churchill Retirement Living’s Spencer McCarthy and Lifestory Group’s Mark Dickinson, stated that: “The recovery drive will be running on empty if we don’t take urgent action to help the millions of people who actively want to downsize.”
Build 10% of new housing for older people
The retirement development specialists say the government should ensure that 10% of new housing caters specifically for the needs of older homeowners.
In their letter to Number 10, the group set out the economic and social benefits of building 30,000 new retirement homes a year, with retirement housing in all forms key to restarting the housing market, as well as keeping vulnerable people safer from future pandemics.
The benefits of downsizing
A report by Professor Les Mayhew of Cass Business School for the Centre for the Study of Financial Innovation argues that there is no housing crisis in the UK, on paper at least, and that UK stock taken as a whole appears to be sufficient to meet needs, but rather that there is a fundamental mismatch between the needs of households and the availability of housing that is appropriate for those needs. For example, there has been a steady increase in sole occupancy households and the number of people set to live alone is predicted to rise by 30% by 2040. Therefore, there is a need to align policy with the predicted changing needs of households going forward.
As reported by Independent Living, a key message of Professor Mayhew’s report is that older people should be encouraged to downsize.
But the UK’s dearth of age-friendly housing means there is a lack of options for the millions who are open to moving, so they tend to stay put.
A new generation of retirees who rent
A quarter of people aged 16 to 64 rent privately at present, up from one in 10 in 1993. According to the ONS, declining homeownership rates at younger ages may have an impact on the type of accommodation older people live in in the future.
Back in 2018, Advantage sales manager James Topping wrote a feature for PBC Today about how Build to Rent developments are catering to “generation rent” and may also help to address the undersupply of housing in the UK. However, he noted that such schemes will need to cater to the changing needs of tenants in an era when renting is no longer simply a prelude to getting onto the housing ladder.
While only 6% of people aged 65 years and over rent privately today, this figure is likely to increase in the future if people who are currently in their 30s, 40s and 50s in the private rental sector remain so into older ages.
Seeking solutions
The retirement developers’ letter to the government argues specialist retirement housing must be central to efforts to get the housing market restarted, while also helping ensure that vulnerable people are better protected against future pandemics.
Prioritising a proportion of new homes for an ageing population would stimulate transactions throughout the housing market, helping young families and first-time buyers move on to and up the ladder.
“Building more specialist retirement housing would be a win-win for the government. It would unlock the housing market, helping older people, young families and first-time buyers. It would also assist with attempts to fix the social care crisis once and for all,” say the housing bosses.
Why the UK’s housing shortfall affects house buyers of all ages
Kate Henderson, the chief executive of the National Housing Federation, has warned: “There is now a rapidly growing number of older people who are struggling just as much as the younger generation.
“This must be a wake-up call to the government that more money for building social housing, and especially housing that is fit for retirement, is desperately needed.
“Our latest research shows that the government must invest £12.8bn in building new social housing every year if they are to ensure all generations have somewhere secure and affordable to live.”
Advantage’s view
In terms of cultural stereotypes, we’re used to younger people referring to the privileged position of ‘boomers’ (the Baby Boomers who were born between 1946 and 1964). This was perhaps the last generation that could expect a job for life, home ownership and financial security in retirement as a default.
However, with a shortage of suitable housing currently affecting both younger and older buyers, it’s rapidly becoming apparent that it’s no longer a question of simply helping people to get on to the housing ladder. Leading housebuilders recognise that in order to ensure that house buyers of all ages have a chance of accessing suitable properties, it’s imperative that we don’t forget those who are ready to downsize.
Expect to see more high-profile calls to the government to increase the supply of affordable retirement housing over the coming months, and more innovative developments for older house buyers coming on to the market which seek to compete with BTR developments in terms of lifestyle perks.
Advantage Home Construction Insurance is proud to work with individual housebuilders and developers on a wide range of projects, including retirement developments. If you would like more information, please call: 0845 900 3969, email: sales@ahci.co.uk or pay a visit to our homepage: https://ahci.co.uk/
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Tel: 0845 900 3969
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