Rightsizing For Retirement
We’re an ageing population in the UK, actually the Western developed economies have some big issues because of that fact.
According to the Office for National Statistics, the over-65’s is the FASTEST -growing age group in England and is predicted to grow by 60% in the next 25 years. By 2024, it’s expected to have grown by five times that of the working population!
However, our current crop of ‘ Perennials’ have absolutely no plans for pipes and slippers and a gradual “slowing down” in life. Retirement, is not a word that adequately describes the 55+ perspective on life.
We’re still vital, in work, hustling, growing businesses, managing grandchildren and basically bailing out financially all the younger generations!
Focusing on the property and housing sector, the over 55’s are a POWERFUL consumer group looking for the right properties and in a growing sense, the right landlords. yes, landlords. For those over- 55, who are not owner-occupiers or have been owner-occupiers in the past but now want to free up capital and want a more flexible, leisure-filled retirement.
Generation Rent doesn’t only apply to the cash-starved Millennials. A increasing number of senior people are looking to the rental market to meet their changing needs for a flexible, leisure-filled retirement. The key word there is ‘ leisure-filled’.
There’s a new trend emerging and one that developers and landlords had better pay heed to- Many retirees in good heath, want is to live closer to the action and better transportation, which means the possibility of renting again in the centre of towns & cities.
Obviously, supply is not matching demand with all housing stock, but perceptions are starting to change. Residential developers are starting to add retirement to their portfolios and it WILL be a growing sector…Tom Scaife, partner in Knight Frank’s retirement living sector, says residential development market will grow by 50% by 2022 to the value of £44bn “The senior sector is being driven by private-sector development and that will continue,” he says.
Money Money Money
For most landlords, however, the real opportunities will be around the build-to-rent (B2R) market or ‘downsizing to rightsizing’. Currently this is actually a tiny part of the new-build market, Although that is set to increase – the senior living rental market is at a low base, but early movers/adopters will capitalise on rental growth and, as more investors enter, yields will sharpen.
Developers will have to adjust their business models for this emerging sector of older people, the current one-bedroom B2R model is unlikely to work in the retirement sector of younger Baby Boomers.
” When you look at the layout of retirement living, a lot comes down to functionality and practicality,” says Savills director, healthcare, Samantha Rowland She says most units will need two bedrooms, for families or carers to stay, living space will have to be more open-plan for mobility and there will need to be space for wheelchairs and add-on care. ” Everyone is getting comfortable with it.” she says of the developers she’s spoken to. “Does it work for a viability point of view? That is definitely work in progress.” she adds.
For many retirees and senior people, renting isn’t a choice- it’s a necessity. According to Age Uk, the number of people aged between 45-64 renting privately has more than doubled in the past 10 years. “These people haven’t been able to become owner-occupiers and can’t access social housing because there’s less availability,” says Gordon Deuchars, policy & campaigns manager at Age UK.
As retirees, they will become less likely to want to keep moving on, so a long-term tenancy is crucial for many. Deuchars says the charity is campaigning for smaller-scale, private landlords to offer longer-term tenancies and to think ‘more positively’ about future adaptations older tenants may need.
Chris Norris, director of policy & practice at the NLA (National Landlords Association), says there are real opportunities for landlords in the retirement market. But he agrees that landlords should be prepared to adjust their business models to meet their needs. “These tenants will have cash assets rather than income,” he says.
Nevertheless, this seniors market is set for huge growth & potential and those looking to invest in a different asset class, it may have significant advantages in the years to come.
Could the Baby Boomer Generation be the saviours of our failing City/ Town centres, could these vital spaces be re-vived by the senior sector?
If you found this article useful and you know someone in your family that would like a chat about how they can future-proof their family homes- get in touch!