Current UK Provision of retirement communities and the wider economic impact.

Legal & General’s analysis of these older homeowners shows there are 3.3 million homeowners who are aged over 55 and looking to downsize in future, according to data from the Centre for Economics and Business Research (Cebr).

These “Last Time Buyers” (LTBs) are sitting on £820 billion of property wealth and 7.7 million spare bedrooms. The equivalent to 2.6 million family homes, this represents 10 years of housing supply based on Government targets – or 20 years based on current housing completions.

Freeing up this housing stock will provide a powerful tool for addressing the housing crisis, reducing overcrowding, boosting the UK economy, and bringing benefits across the property market. Not only that, but a move to more suitable housing for those aged 55 or over will also deliver a number of health, financial and social benefits, including safer accommodation for older people, reduced energy bills, and the ability to free up more spaces in local schools.

With over 11.4 million homeowners aged 55 or over, older buyers could hold the key to alleviating the challenges that others are facing across the property chain by freeing up houses for growing families. A typical LTB lives in a 4-bed house, but wants a 2-bed property.

Almost a third of older homeowners considered downsizing in the last five years: only 7% actually did. Currently there is a definite lack of suitable housing for LTBs to move into.

To unlock this market, we need the right housing (two or three bedroom properties suitable for older people and near family, friends and facilities); the right tax regimes, with stamp duty a key focus; and better options to allow for equity release, in order to harness the potential of this locked up housing wealth in cases where older people decide to stay where they are.

Additional advantages of unlocking the LTB market

By moving into more suitable housing LTBs could also gain important health benefits. For example, those over age 65 currently have the highest mortality rate and the most severe injuries related to falls. In England and Wales alone, 49% of accidental deaths within this age group were caused by a fall.

As such, encouraging LTBs to move into purpose-built accommodation (without steep staircases, for example) could have a major impact on figures like these, yet there is simply not enough of this type of accommodation available for LTBs.

It is also worth noting that many LTBs are currently living in homes that are very expensive to heat, especially compared to new retirement homes. As such, a move to a more suitable property could also help this group to free up additional disposable income.

Recommendations from the report

The UK suffers from a chronic undersupply of age-specific housing. Only 2% of the UK’s housing stock is retirement property, housing just 1% of the 14 million Britons in their 60s (compared with 17% living in retirement accommodation in the USA). All too often, this leads to older people living in homes that do not suit their needs, with moves often forced by circumstance rather than being a positive choice.

Not only does this harm the interests of older people, it has wider social drawbacks, including the under-occupation of homes and increased pressure on the health & social care system. The critical barriers that older people identify are a lack of suitable accommodation, the cost of the available options and tax considerations.

Steps to unlocking the LTB market:

1. Political support: Government needs to focus on this issue and commit to supporting the expanded provision of age-specific housing to serve the needs of older people. This requires a consistent focus that is then reflected in housing, planning and health & social care policy.
2. An integrated policy approach: Policy committees need to recognise that, when done well, retirement housing can connect residential infrastructure with the health & social care system, providing major benefits for both.
3. Diversity of tenures: The majority of retirement housing is sold to occupiers on a leasehold basis. Increased volumes of homes across all tenures, including freehold, shared equity and rented options, would allow the system to cater to a wider variety of needs and offer flexibility as people’s needs change in later life. Moreover, a thriving new build retirement living sector would remove some of the stress cited as a main reason for not moving. Part-exchange of current homes would also remove the stress of selling, as well as saving estate agents costs.
4. Greater supply in the mid-market: At the moment, provision of retirement housing is concentrated amongst affordable housing providers and a small number of premium private sector operators. This leaves much of the market relatively underprovided with good quality stock.
5. Planning policy: Attitudes to retirement housing vary widely across planning authorities. This leads to an unhelpful variety in terms of approaches used and the recognition of the benefits that expanded provision bring. Planning authorities should recognise the specific benefits of retirement housing and set targets for its delivery.