The evolution of seniors housing
The supply of new seniors housing stock across the UK is increasing. In 2023, more than 9,140 new seniors housing units were built, up 19% on the previous year’s delivery and the strongest year for new supply since 2016.
As has become the case in recent years, delivery in 2022 was weighted towards homes within Integrated Retirement Communities (IRC), which deliver larger communities with higher levels of services. In total, IRC schemes accounted for 58% of new seniors housing units built in 2023.
There is a growing recognition of the role that seniors housing can play, both in improving quality of life for seniors and relieving pressure on the NHS and social care system. Research from the ExtraCare Charitable Trust found significant improvements in health and wellbeing among residents, for example, as well as a reduction in use of health care resources. Yet, whilst delivery has picked up, it remains significantly short of need. Annual delivery accounts for just 3% of the total number of new homes built each year, despite the seniors age cohort accounting for the lion's share of past and future population growth.
It is a statistic cited elsewhere in this report but one which bears repeating: there will be an additional four million seniors living in the UK by 2043, according to ONS projections. Over that time, the over-65 age cohort is expected to grow at three times the pace of the national average.
Figure 1: 2021-based population projections, by age (Source: Knight Frank Research, ONS)
Previous updates to this research had suggested that local authorities are responding to this. The latest analysis suggests that progress has halted. A third of local authorities are still to adopt specific planning policies and site allocations addressing seniors housing. Some 34 have moved backwards over the last two years.
Planning is, of course, just one barrier holding back delivery:
- Inflationary pressures have raised construction and operating costs over the last two years
- The elevated cost of debt has posed another challenge for those needing to fund development
- Nutrient and water neutrality issues, insufficient local government resources, and local plan failures add another layer of complexity in some locations.
And yet construction activity has been resilient. Analysis of planning data shows more new seniors housing schemes are coming forward. Around 200 new planning applications were submitted last year, roughly on par with 2022. Since 2022, some 270 schemes have received planning permission – accounting for a potential 14,474 additional homes.
Seniors Housing Planning Update
Figure 2: Schemes with an update in the last three years
Figure 3: What needs to change to accelerate the growth of the sector? (Source: Knight Frank Research)
We are also seeing an evolution of the seniors housing model to cater to a broader range of residents. This includes a trend towards larger developments, for example, typically with 60-200 units. The planning pipeline suggests this will continue. There are 115 schemes with 100+ units in the planning pipeline, compared to 255 currently operational; the majority of which are social housing and built pre-1980. There is also increasing development activity in urban locations.
The data also points to a further increase in the provision of age-targeted rental product and shared ownership, as investors and operators look to offer seniors the broadest choice possible. Delivery of rental product is expected to increase further in the coming years, with analysis of the pipeline suggesting total private rental units will nearly double to just shy of 10,000 by 2027.
The appetite from new and existing market players to deliver more age-appropriate housing is clear. A more consistent and supportive policy environment will help unlock more supply, more propositions, and more choice for seniors.
Indeed, in our survey of the leading operators of IRCs in the UK (Fig 3 above), 65% and 55% of respondents respectively highlighted better awareness of the seniors housing proposition from local planners, and clear targets for seniors housing in Local Plans, as the two changes required to accelerate the growth of the seniors housing sector.
From a policy perspective, the message is clear: the focus should not just be on building more homes; it is about building the right types of homes.
Oliver Knight
Partner & Head of Residential Development Research Knight Frank
oliver.knight@knightfrank.com
+44 (0)7468 727 562