Author : Mary-Anne Bowring
Later Living is heading for a crisis: is Later Living BTR the answer? The post-retirement scenario presented by the evolving demographic and property market trends reveals a challenging situation, particularly for older renters.
The recently released Scottish Widows' annual retirement report has highlighted a disturbing fact that rent takes away around 60-70 percent of retirement income in many areas of the country. Shockingly, it even exceeds 100 percent in London. This means retired renters have to often dip into savings or look for alternative income sources to make ends meet. The landscape for older renters is also rapidly changing. A leading lettings agency has released data that predicts a surge in the number of older renters over the next decade. The number of households aged 65 and above renting in England is set to double by 2030, reaching over a million by 2033.
The Scottish Widows' report warns that in the current economic climate, approximately 35 percent of older individuals, regardless of whether they are renters, could struggle to afford essentials like food and heating after retirement. Of those nearing retirement, around 35 percent may face challenges in living off their projected income, with nearly half of those facing difficulties in paying rent.
The outlook for the long term is not any brighter either. A considerable 41 percent of people in their 20s are projected to encounter retirement hardships, with an estimated average retirement income of 10,000 for this group. The survey includes diverse factors affecting retirement lifestyles, such as age, ethnicity, gender, employment status, and underrepresented groups like disabled individuals and the LGBTQ+ community.
It is important to note that women are particularly disadvantaged, as they are expected to receive a third less retirement income than men on average. The UK anticipates a significant increase in the over-75 population by 2043, putting more pressure on housing and care systems. This looming challenge has triggered interest in the later living sector.
Acknowledging these alarming statistics, the UK government's Housing and Levelling up White Papers from 2017 and 2022 underline the need to find practical solutions and provide purpose-built later living accommodations.
With 42 percent of UK residents over 75 living alone, the later living sector offers a possible remedy for dealing with this vexing issue.
Mental health concerns tied to solo living have drawn attention to the appeal of later-living communities as a social alternative. Presently, the UK's housing-with-care beds stand at 74,000. It translates into a market penetration rate of 0.9 percent compared to the global benchmark of 6 percent. Forecasts suggest this will grow by an impressive 160 percent in the next five years.
Baby boomers, benefiting from post-war house price inflation, are open to redistributing their housing equity for family support to get children onto the housing ladder and for retirement. Renting provides flexibility for downsizing, quicker access to care services, and the option to relocate without selling property. It also removes the challenges of buying a flat in a retirement community where the 2nd hand resales market often sees depressed pricing.
Later living communities offer a 'one move' 'one bill' solution with wide-ranging service and care packages, extending stays and providing care options. Longer tenancies in later living rentals can guarantee income for operators and assure families through lease guarantees. The flexibility also extends to accommodating family members and providing various amenities.
In a landscape where retirement poses challenges, the later living sector, particularly in renting, is emerging as a potential solution to provide comfort, flexibility, and support for an aging population. Albeit for purpose-built later living as a facet of BTR, achieving premium rents depends on significant own home equity to release, or renting the family home to pay for the Later Living rent, and consent of the children who often are required to stand as guarantors. Hence, the target age for later living BTR is 80+ years old, with a target stay of 7 ton10 years. Some schemes have partnerships for progressions into the care environment either on-site or nearby.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
Strategic partnerships, holistic delivery/ opportunities, growth, value engineering, thought leadership
Ian Barber MD BTR Mobilisation & Leasing
Runs HQ & site lease-up teams. Drives rent pricing, mobilisation, marketing, happy residents!
Jon Curtis MRICS Head of Building Engineering
Chartered Building Surveyor. Lectures on EWS1 & building safety. Runs CapEx programmes.
Kate Robinson MIRPM MD Blocks/FM Management (London Region)
Master plan setup, ops and staffing and resident engagement. ISO45001 champion.
Lee Harle Partner Ringley Law
Plot conveyancing. Debt litigation. Group Company Secretary.
Anthony Kingdon MIRPM AssocRICS MD Blocks/FM Management (North Region)
Stakeholder engagement. Mixed tenure specialist. Budget management. Plant audit, PPM compliance.
Chris Georgalis MRICS Head of Commercial Valuation
Chartered Valuer. Rental valuations: retail, leisure. IRR modelling and valuations for secured lending. Compulsory purchase & rent reviews
Nichola Pughe MRICS Head of Residential Valuation
Chartered Valuer. Rental development & mixed use valuations, IRR modelling. Leasehold enfranchisement specialist
Libby Chen MSc Compliance Manager
Operational Plant & Equipment strategy PPM Compliance lead, Asset tagging Client major projects
Dipesh Parekh Director PlanetRent
Customer centric, vertically integrated PropTech/fin-tech solutions.
Leana Aristodemou MIRPM MARLA AssocRICS Strategic lead: ESG & Asset Business Plan delivery
Financial modelling, valuation analyst to support underwriting & fund reporting.
Natalie Birmingham Helpdesk Support Manager
Trainer & Helpdesk Manager: people, systems,contractors. ISO45001 supply chain accreditation.
Steve Norman Planning Director
Land due diligence (opportunities & constraints) Has contributed to a number of award winning schemes.