The Gap
Watch this space!
As we continue to grow as a brand we are delighted to see such respected industry experts reporting on such pivotal changes within the later living market.
Our vision is to provide people with a choice, which let’s face it is something which is limited just now. A choice to experience a new, vibrant, healthy community, a community where people aspire to live in to experience friendship, relevance, business contacts, hobbies, health and wellbeing, but to do it on their terms, not when they have to. A place where people feel safe, have fun, a place where life is simple.
The last few years have seen a dramatic shift in mindset, as more and more eyes have been opened to “THE GAP” in the rental market – what do we mean when we say gap?
As Christine Young says “Well let’s think about that, typically people start to consider their “later living” in their late 70’s onwards (usually when they are forced to) but what about the full 20 years prior to that? The years from 50+ when people in many cases, have opportunities to explore new and exciting ways of living, as they do in the US in the ‘active adults’ market”.
Don’t take our word for it!
Here are some interesting statistics from recent reports from the Property Experts with JLL secifically exploring the rental pricing structure versus purchase.
JLL analysed over 500 UK IRC (Integrated Retirement Communities) listings from 125 different schemes and nine operators. The findings below, really do go some way to debunking the outdated opinions that renting in later life is something which is not beneficial or possible.
They found the average rent for an IRC unit was £3,296 per calendar month. Rents tend to be inclusive of the service charge and some operators also include provision for domestic assistance, bills and food. They established that the service charge accounted for around £643 per calendar month, 20% of the average monthly rental figure.
The average retirement housing unit rent was roughly just over half the price of an IRC at £1,662 pcm, these typically do not have the same high level of amenity provision as IRC’s and without the same levels of care available. They are also generally smaller than IRC units and more greatly geared towards one-bedroom units, JLL compared the average price per sqft per annum and saw the rents are slightly more closely matched with IRCs at £52.44 and retirement housing at £41.52. Rental IRC units are offered as either studios, one bedroom, two bedrooms or in rare circumstances three bedrooms.
The majority of the schemes analysed by JLL offered rental as an option alongside outright purchase and shared ownership. Hawthorns, Birchgrove and Auriens have a purely rental tenure offer, but only make up a small percentage of the total schemes. Potential residents are increasingly offered more flexibility and options in how they access IRC’s and renting can give them a ‘try before you buy’ approach before committing to selling their home.
When comparing the average rent to the purchase price, including the estimated service charge payable on IRC’s with both tenures available you would need to rent for an average of 16.35 years to reach the same value. The average length of stay in an IRC is approximately 5.3 years according to our JLL IRC Index, so there is an affordability saving when choosing to rent.
Mayhew Review - Futureproofing and innovation
Mayhew Review Highlights the changes not only in housing but also mindset to meet the requirements of an ageing population and their health and wellbeing. Nowhere in the UK’s housing market is the shortage felt more acutely than the later living sector.
The recent Mayhew Review found that the UK is failing to adapt to the impact of an ageing population, with only around 7,000 retirement homes being built each year. This is in contrast to the 50,000 new units the Review outlines are needed annually.
Considering that the population aged 65 and over is expected to increase to 17.2 million by 2040, there is clearly a major demand and supply imbalance that needs to be solved. It is, therefore, critical that more is done to create later living homes in 2023 and the recommendations of the Mayhew report must be considered seriously, especially regarding planning and putting retirement housing on a level playing field with other developments. However, the focus must not just be on increasing the amount of homes brought to market.
Professor Les Mayhews says “The idea of ageing and attitudes towards retirement are changing and developers and operators must balance delivering high quality homes and providing amenities that offer residents the opportunity to engage and socialise – supporting their health and wellbeing.”
Knight Frank Forecasting the requirements and growth of sector
Knight Frank estimates that with current momentum – supported by the weight of capital chasing the sector – the next five years will see delivery accelerate further. The firm expects the total number of specialist seniors housing units in the UK to grow by 7.5% over the next five years, taking the total size of the sector to just over 820,000units by 2027.
The composition of the market will undoubtedly shift over this time, as operators continue to broaden the range of options available to seniors. Delivery of age-targeted rental product is expected to increase further in the coming years, for example, with Knight Frank analysis of the pipeline suggesting total private rental units will increase by 91% to just shy of 10,000 by 2027.
Tom Scaife noted: “Rental is a growing part of the seniors housing market, with more investors and operators offering it as a tenure option either in standalone build to rent seniors housing schemes, or pepper-popped within for-sale projects. Growth reflects a need to offer seniors the broadest possible choice of housing options. Consequently, our analysis of the development pipeline suggests that over the next five years the total number of private age-targeted rental units will have doubled, yet even accounting for such large growth, private rental stock will only account for 1.2% of the total number of specialist senior housing options making the need for further expansion more important than ever.”
Oliver Knight, head of residential development research at Knight Frank, who conducted the research, concluded: “The current significant imbalance between supply and demand underscores the headroom in the market today for investors and developers to deliver age-appropriate housing, which will only increase with population growth.”
A lenders perspective
Paragon Bank question whether BTR is just the preserve of the young, or whether it’s time to stop missing the opportunity of the not so “Later” Living.
While BTR investors may think the rental market is the preserve of the younger demographic, recent analysis by Paragon Bank shows that those in the 55-64 years and 65 years and over cohorts of tenants are the fastest growing segments of the private rented sector, increasing by 118% and 93% respectively since the turn of the last decade. The number of privately rented homes in England where the homeowner is aged 55 or over has more than doubled since 2009/10 to 576,000.
The end of pandemic restrictions has also meant many new retirees don’t want to just stop work and sit back – they want to enjoy a more active, flexible way of living. Renting keeps their options open to experience different locations, move closer to family or friends and enjoy a choice of different lifestyles.
Those looking to rent in later life are also often attracted to a home which not only requires less maintenance but offers lifestyle factors that modern apartment buildings can offer, such as gyms, swimming pools and communal areas. They value being part of a social community, having shops, health facilities and good transport links all within easy reach.
Looks like those in their 50's may not have to take the well trodden path...
Who says everyone is the same and should conform to a standardised way of living?
Exciting times indeed!