The ripples of the pandemic are still being felt within the sector and the impact on both social and political pressures remain in the balance. As we now look forward and begin to address the learnings from the pandemic, here we look closely at the future of the sector and how we tackle the current housing crisis.
Investment is increasing within the sector with 30% year-on-year growth of retirement units available to rent or buy. With the construction of 7.5k units annually and counting, the sector is moving in the right direction, and the quality of stock available is of a superior standard. But, there is a long way to go and stock must only meet the physical needs of the aging population but also the financial needs of every type of pocket.
A growing problem
The biggest obstacle for the housing market right now is the available stock of family properties. The main issue is tenure, as those who are nearing or at retirement age, show reluctance to downsize their large ‘forever family home’ and move into smaller more manageable properties.
There are many hurdles when selling a property, particularly the emotional attachment of owning a property for many years, and this reluctance to let go it go is causing a housing stock crisis for families who also want that same space, garden, and room to grow. With 55% of homes in the UK owned by the over 65 demographic and more than 2 unused spare bedrooms in each, there is an estimated 15million unused bedrooms in the UK.
Urban to suburban migration
The pandemic only made this demand for family housing stock more acute, as homeowners took advantage of the savings presented by the Stamp Duty Holiday, reassessing what they needed from their property. Perhaps most impactfully for the market we saw the carpe diem effect as people began to bring forward life decisions that may ordinarily have happened more gradually.
Areas further outside the traditional inner-city locations grew in demand from those wanting to make a permanent lifestyle change. Demand continues to rise, and prices are being pushed up as more homeowners look to make the move for a better work life balance. These in-demand and popular suburban areas are often top heavy with larger family homes that are occupied by the over 65’s and therefore creating a bottle neck supply, that unless addressed with a more varied selection of suitable homes for retirees to move to, will only add to the supply and demand crisis in the UK.
Learnings from the pandemic
‘Lessons from the Stamp Duty Holiday Report’ shows that the SDLT holiday brought about numerous benefits, including an additional 140k property transactions during the pandemic resulting in an additional spend of £2.2 billion for associated services offering a substantial boost to the economy.
Government Call To Action
Make it appealing to downsize could be key to help those of retirement age to move and free up the family homes they hold dear. Government incentives, such as SDLT (Stamp Duty Land Tax) exception for downsizers, could help widen the social and economic benefits of moving to retirement housing, aswell as dramatically reducing the cost of living in a large property as a solo resident. It’s a win win as the government would ultimately raise more tax as Lord Best comments that each top of chain home sale that facilitates more about 2.7 other sales thereby generating more tax overall.
A frustrating topic, but how do we make a change and impact this growing problem of supply meeting demand. ARCO and Government are doing well addressing the problem, but do we need to look a more local level to solve the housing crisis?
‘Our tech led customer centric approach to home buying helps our customers make the move into their retirement community a simpler and easier decision to make. By simplifying the process, we make the decision to sell a property an easier and less stressful prospect. We remove the obstacles and delays for those in their later years, so they can concentrate on the move ahead and enjoy the move, rather than juggling viewings or worry about their sale falling through. Then, once Spring have purchased the property, we redistribute the property back into the market to assist with the wider societal need for to those wanting family homes, helping to bridge the seismic gap between supply and demand for this much needed stock’.
‘To help tackle the problem at grass roots level, I would like to set a challenge to our partners, ARCO and Built Environment Network to host educational events aimed at local council authority leaders. These events will look at planning at a local level with the aim to reform, raise awareness and generate discussions to ensure the right balance of homes are built within the borough and educate leaders as to the benefit of retirement developments and the positive impact they have on the social and economic benefits to the local and wider community’
Watch Cormac’s Retirement and Later Living Event best practice presentation here: https://youtu.be/RuoRWGMBxKs