The supply of new homes for older people, specifically retirement and Extra Care, has averaged around 7,000 units per year over the last decade. This currently equates to a 1.4% increase in existing stock, around double the level being achieved by the general new build housing market. However, there is still room for improvement.

There are around 515,000 Retirement and Extra Care units in England and a large proportion are local authority and registered provider stock. Around 385,000 units fall into this category and they play an important role in housing the most in need.

However, they also present a challenge given the large numbers that were built in the 1980s and early 1990s. Many were built with grant funding that encouraged volume rather than quality or space.

Although a large number are being refurbished every year, the constraints of the original stock, in terms of size and capacity for upgrade, mean that many will deliver a less than optimal solution for the nation’s future housing needs.

Private developers and operators form the other side of the market with around 130,000 units. These range from the converted country house market of the 1970s and 80s to the purpose-built market dominated by the likes of McCarthy and Stone (with around a 70% share of the for-sale market in 2014).

These homes offer a solution for people who don’t qualify for social housing-based care with products that highlight the safety and security of retirement living to those in need.

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Growing in size

The typical new build development contains around 20 – 50 one- or two-bed flats priced at a similar level to local area houses, although recent developments are growing in size. They tend to be located close to town centres and/or nearby bus stops and offer some communal space and visitor accommodation. Their business model is based on maximising land use through minimal parking provision and high density combined with achieving premium prices on a per square foot basis. As well as high purchase costs there are also service charges that cover various outgoings, including building managers and emergency call monitoring.

Additional care options may be available but those in need of nursing care will typically have to move into a dedicated nursing home.

Given the costs and service offerings, this model caters well to those in need but does not provide an attractive proposition for aspirational downsizers. As such, sales rates can be slower than for traditional housebuilders and may require finished homes for their potential residents and families to assess and measure against their needs and furniture.

Aspirational market

Many developers are now looking to expand into the aspirational market, with financial support from private equity. This means building attractive and appropriately sized homes that people with a lifetime of belongings can and want to move into. New build homes with kitchen-dining-living spaces that work for younger purchasers may not be attractive to older buyers downsizing from a house.

Many residents will be leading active social lives and so will need space for their car rather than just a bus route into town. The focus on safety and security in the current retirement housing sector can be off-putting to those at the younger end of the spectrum.

Instead it is important that housing is future-proofed; that is in terms of building homes that can adapt to future needs with wiring for alarm systems or space for stair lifts or downstairs showers, rather than trying to predict future technologies and whether we’ll need space for 1960s-style robots.

Targeting the aspirational market offers rewards with some developers seeing increased buying off-plan, but it also comes with risks as competition for land increases with a reliance on achieving premium prices relative to the local market. This will help to increase the delivery of homes for older people.