A new style of retirement property is needed for the “Elvis” generation.
Baby boomers have high expectations when it comes to quality of life and standard of accommodation. Those who grew up with Elvis and the Beatles still see themselves as “with it” and want retirement property to match, according to a new Housing Futures report from Strutt and Parker and Octopus Healthcare.
Stephanie McMahon, Head of Research at Strutt and Parker, says: “The baby boomers have voiced objections to living in the same way as their parents in retirement. Often in good health, with decent pensions and active lifestyles, they want to live where they can continue to enjoy their established way of life, minus the day job. They want access to local culture and recreational facilities, such as theatres, farmers’ markets and swimming pools, but also accommodation that is flexible enough to meet their future care requirements.”
She suggests “Platinum Places” as a potential solution. The suggested developments would be mixed-use and mixed-age, urban or edge-of-community sites in towns, cities or large amenity-rich villages.
At the moment, property choices are limited and there are concerns about the fees charged by some retirement property providers. Only two per cent of the UK’s housing stock is designated as retirement accommodation, according to Mike Adams, CEO of Octopus Healthcare, who adds: “For the property industry, there are compelling reasons to deliver retirement housing: the demographics are supportive, the market is undersupplied and there is a pressing need for well-designed and well-located stock.”
The lack of suitable accommodation is having a negative impact on the wider property market, with empty-nesters lacking an incentive to downsize and staying in their existing family homes. This means there is less housing stock available for younger buyers.
The Housing Futures survey questioned 2,000 people aged 65 years and over and reveals that 73 per cent of respondents have no plans in place for retirement accommodation, while 42 per cent believe there is a lack of suitable properties to downsize into and a similar number would like a six-month trial before permanently moving into a retirement community.
Developers may be interested to know that there is a market for build to rent with 17 per cent of respondents saying they would consider living in a professionally managed rental block.
Richard Harris, Head of Retirement Development at Strutt and Parker, says: “To effect change, developers must meet the aspirations of a new generation of retirement residents. While a minority are financially footloose and able to make use of their increased spare time with travel and leisure activities, the majority are concerned about the affordability of future health and care needs, their ability to stay independent and their access to friends, family and companionship. Consequently, retirement developments that incorporate good public transport, a sense of community and access to health and leisure activities are most likely to succeed.”
Other major concerns for buyers are short leases and the fees charged on retirement property, which can be a drain on living costs and make the property a poor investment. Homes for the over 55s can come with high monthly ground rent and service charges and can be hard to re-sell thanks to high exit fees, which can be as much as 30 per cent of the property’s value.
A recent Law Commission report says that “unfair fees” can be hidden in complicated leases. This issue helped spawn Pegasus Life founded by Howard Phillips, a former chief executive of retirement housebuilder McCarthy and Son. It aims to reform the retirement property business model to offer a better deal for buyers. The company, which has 30 schemes underway and is looking for sites in Yorkshire, will offer leases of 1,000 years. It won’t charge exit fees and promises fair service charges via a not-for-profit management company.
Stephanie McMahon, of Strutt and Parker, is calling on developers, operators and government to work together to provide more baby boomer-friendly property.