Generation Stuck – Retirement Living and Housing

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Posted in:Property and Construction, Property and Development, Real Estate|June 27, 2017 | Join the mailing list

A great deal of the commentary surrounding the UK’s housing supply concerns itself with the lack of affordable homes for first time buyers.

Whilst the construction of more affordable homes is clearly important, there is a vital piece of the jigsaw missing – homes for the elderly.

The UK’s population has risen by 10 million in just 25 years, an increase partially driven by an increase in life expectancy. A lack of suitable hosing stock for the aging population means that older people frequently stay in homes that no longer meet their needs, blocking the housing chain and eventually forcing people into care homes. As things stand, the housing market is woefully unprepared for the changing demographics in the UK.

Changing demographics

By 2019 1 in 12 people in the UK will be aged over 80. Yet there appears to be little discussion about how new housing measures and investment will meet the needs of the aging population. As a result, demand for retirement properties in the UK is extremely high and yet supply is woefully low. Retirement living is not to be confused with care home provision and there is a desperate need for housing aimed at the younger market. Industry experts have identified the ‘bungalow nosedive’ as a significant factor in starving the older generations of suitable downsizing options. As development land has become more expensive it is far more lucrative for developers to build upwards and as far as investment opportunities go bungalows have become largely obsolete. As a result, just 1% of new builds in 2014 were bungalows down from 7% in 1996. 

Investment and development opportunities

The lack of suitable retirement housing presents a promising opportunity for investors and developers who are willing and able to address this gaping hole in the housing market. The over 55’s are a large group made up of different generations with different expectations and aims many of whom don’t consider themselves ‘old’. But crucially, they have money to spend. Estimates suggest that by 2025 almost 80% of over 65s would be classified as mid to high affluence, largely as a result of house price wealth. Already one in six of the over 65 population has a household wealth in excess of £1 million pounds. Research suggests that one third of homeowners aged over 55 (that’s almost four million people) are considering downsizing and a lack of suitable housing remains the principle barrier.

Industry experts have identified a gap in the market for higher end provision with a more personal environment and a selection of more targeted facilities and services. Self-contained units with communal facilities and the option for on site care are the fastest growing form of housing in the retirement living sector. The good news for investors is that this form of retirement accommodation tends to follow UK house prices growth. Meaning that a retirement home of this nature has the potential to double in value in 12 years. There is enormous scope within this market for growth, as the housing with care market currently sits at just 0.72% in the UK compared to 5% in countries like Australia and NZ.

Challenges and solutions

There are, of course, challenges involved for those wishing to tap into the opportunities available in retirement living. Whilst the private sector does invest in the building of age appropriate housing, these efforts are yet to be supported by governmental policy and local planning authorities. A number of developers are campaigning for new measures to help aging downsizers. Their proposals include an SDLT exemption for over 65s moving to a smaller property and a government backed ‘help to move’ scheme, similar to help to buy in order to make the downsizing process less onerous and more affordable.

To find out more about the issues raised in this post, or to discuss any queries regarding property development or investment get in touch with our Real Estate team on or call +44 (0) 161 829 2599.

Find out more about our Real Estate and Property services here.
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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