Analysis says UK housing market needs shared ownership model for older people

The housing needs of 300,000 older households who are not financially well off are not being met by the current property market in the UK, according to a new analysis.

This group cannot afford the price of retirement homes for sale but are not attracted to the current sheltered homes offered by the social sector but a shared ownership option could work, says the research from property group Savills.

It suggests that there is an oversupply of 140,000 sheltered homes in the UK, which it argues presents an opportunity for social landlords to convert some of these properties to shared ownership.

‘The housing market is failing to meet the needs of older people. Unsurprisingly, older homeowners will only move to a home that ticks all their boxes, unless ill health necessitates a move,’ said Helen Collins, head of Savills Housing Consultancy. .

‘Housing associations have the experience and capacity to develop new retirement housing options to meet the needs of those who don’t have the equity to downsize in the open market. A new retirement living shared ownership product could be a way to meet needs and free up much-needed family housing.”

The analysis report explains that open market provides housing for older people who have enough wealth tied up in their existing homes to allow them to downsize and around 40% of all older households could afford to downsize and have a least £50,000 leftover to supplement their pensions.

However, at the other end of the scale while social landlords provide for the least well-off, offering rented, often sheltered homes for older people and such accommodation accounts for the needs of around 35% of the elderly population, much of this accommodation needs updating.

Savills estimates that the over 65s hold around £1.5 trillion in housing equity, around 43% of all housing equity in the UK. But homes within new build retirement developments are typically priced in the upper quartile of the flat market, putting them out of reach of many aspiring downsizers.

This creates a ‘squeezed middle’ which accounts for 255 of all over 65 year old households that own their own home, but have insufficient equity to downsize into an open market retirement property.

The report says that this group more often than not remain in their existing homes and only move into sheltered housing if health or financial pressures force them to. Whilst rented sheltered housing locally might be an option, it is not always seen as an attractive option due to the age and design of the accommodation.

Savills research estimates that there are some 560,000 sheltered rented homes for older people across the country, but demand for just 420,000. At face value, that’s an oversupply of 140,000 homes.

But it warn that this is not a simple story of oversupply and in many markets demand outstrips supply. In urban areas, such as Birmingham and Leeds, demographic changes have seen older residents move out of the cities to larger homes in the countryside. Markets such as the New Forest, Sheffield, and St Albans have need that outstrips supply.

The report also points out that rented sheltered stock is often of an age and design that is increasingly failing to attract the next generation of retirees. This presents a challenge for the social landlords operating these homes, many of which require significant investment to bring them up to date.

Savills believes there is an opportunity for social landlords to consolidate stock and create homes that are more attractive to older households and more financially viable long term for operators. One solution could be a new shared ownership product that would allow households with less equity to downsize to more suitable accommodation, yet still have substantial cash left over from the sale of their home.

Social landlords have built over 180,000 shared ownership homes, mostly for working age households and the report believes that it is a familiar product that has potential to be expanded to give older home owning households more options.