The critical role of ‘rightsizing’ for an ageing population

First published on Healthcare Property.

Victoria Thourgood, head of corporate real estate and the later living practice at UK and Ireland law firm, Browne Jacobson, unveils the findings of a new report which aims to untangle various legal and financial hurdles to developing more senior housing and discusses why the adoption of ‘rightsizing’ remains limited compared to other countries.

Projections indicate that the number of individuals aged over 85 will double in the next 25 years, with a quarter of the UK population expected to be aged 65-plus by 2050.

This demographic shift is set to impact every aspect of society, from the workforce and economy to healthcare, social care, and other public services.

As Britain faces significant challenges arising from its an ageing population, the concept of ‘rightsizing’ presents itself as a vital-yet-underutilised solution to some of these challenges.

Senior housing options support physical and mental wellbeing in later life. And the health and independence benefits of age-appropriate housing, especially integrated retirement communities (IRCs), are becoming increasingly recognised.

The benefits

A pivotal study conducted in 2015 by the not-for-profit IRC developer and operator, ExtraCare Charitable Trust, in collaboration with Aston University, highlighted the significant advantages of retirement villages.

The research revealed continuous improvements in depression, perceived health, and memory among residents, alongside a 7% cost reduction to the NHS due to decreased hospital stays and fewer unplanned and routine GP visits.

Further studies have shown enhanced physical activity, reduced anxiety and, notably, diminished loneliness – a condition the NHS acknowledges as having a profound effect on health.

Despite these clear advantages, though, barriers such as funding, scale, supply, and affordability have impeded the broader development of IRCs, with only 3% of new homes being developed for senior living.

As Britain faces significant challenges arising from its an ageing population, the concept of ‘rightsizing’ presents itself as a vital-yet-underutilised solution to some of these challenges.

Recent recommendations from an Older People’s Housing Taskforce report aimed at increasing the availability of later living accommodations include dedicating 10% of affordable housing to later living, favouring senior housing in planning policies, adopting more-flexible design and construction methods, and introducing financial incentives like a capped stamp duty for rightsizing.

These proposals underscore the need for innovative solutions to overcome the challenges hindering the expansion of IRC development.

Behind the curve

However, the practice of ‘rightsizing’ – choosing a home that fits an individual’s current needs and lifestyle, distinct from downsizing for financial reasons – has yet to become a cultural norm in Britain.

Rightsizing by retirees can also help alleviate property ladder bottlenecks by freeing up larger family homes for the market.

And new occupants are more likely to invest in energy efficiency improvements to older housing stock, creating a positive domino effect.

This practice is more common in countries like the US, Canada, Australia, and New Zealand, which offer a wider range of independent and assisted living options.

For instance, 6.5% of over-65s in the US reside in IRCs, compared to just 1% in the UK.

There are almost 20,000 retirement community providers in the US, where the later living market is forecast to grow from $113bn in 2024 to $150bn by 2029.

Much progress is still to be made across the Atlantic, but there’s an acceptance the American dream’s latter years can be spent in retirement communities rather than large, detached houses.

Planning for the future

For Britain to normalise this practice, providers, intermediaries, government, and the wider sector must consider how to communicate the offer to people not just at retirement age now, but who will be in 20 to 30 years time.

Another key consideration here is making units affordable for their target residents – they can’t only be for those with high-value homes to sell.

With more than 90% of residents selling their home before moving into retirement housing, according to Knight Frank, there’s some correlation between the value of their home and what they can afford to live in during their retirement.

For Britain to normalise this practice, providers, intermediaries, government, and the wider sector must consider how to communicate the offer to people not just at retirement age now, but who will be in 20 to 30 years time.

With the delivery cost of an IRC being a function of the land cost, build cost, and profit, its integrated services can mean the outright purchase of a unit is often unaffordable.

This might explain why operators often focus on London, East Anglia, and the South East of England for new locations.

For rightsizing to really become commonplace, a wide range of senior living options are needed across the country, along with plenty of tenure options for those who choose to rent instead of buy when moving into retirement communities.

Greater choice is pivotal

In December, the Housing Learning and Improvement Network (Housing LIN) published a report titled Older People’s Housing Preferences, funded by UK Research and Innovation.

It provides further insight into the housing circumstances, aspirations, and preferences of older adults in the UK.

Based on a representative survey of over 5,500 UK adults aged 50 and over, it highlighted how location is the most-important factor in their decision-making.

It found that almost 60% expect to move into a smaller property, which suggests that more people might be willing to rightsize if they can find a home that meets their needs in their locality.

This aligns with the 2023 Associated Retirement Community Operators (ARCO) manifesto for an IRC in every town, updated last year to include an IRC in every London borough.

For rightsizing to really become commonplace, a wide range of senior living options are needed across the country, along with plenty of tenure options for those who choose to rent instead of buy when moving into retirement communities.

Ultimately, for Britain to embrace rightsizing, a concerted effort from providers, intermediaries, government, and the wider sector is essential.

This involves not only communicating the benefits of rightsizing to current and future generations, but also ensuring a sufficient choice of housing options to cater to the diverse aspirations and needs of older people.

We must ensure current and future older generations understand what those options are.

There is a misconception that older people are frail and dependent, and that age-appropriate housing is all about design features such as wider doorways for wheelchairs.

In reality, it is also about freedom to spend your time leading a fulfilling life doing the things you really want to do, such as volunteering or learning a new skill, rather than worrying about getting the boiler or fence repaired.

All this underscores the critical need for a strategic approach to delivering increased later living options.

And this approach must prioritise collaboration with later living providers, local authorities, and healthcare agencies to develop strategies that cater to the differing needs of older people.

Such efforts will not only address the challenge of providing appropriate housing, but also contribute to managing other key issues like social care provision and affordable housing supply, marking a significant step forward in Britain’s response to its ageing population challenge.