Are longer tenancies back on the housing agenda?

According to reports, the new Housing Minister Gavin Barwell supports the concept of longer tenancies for renters in the private sector and is investigating ways of making it easier for private tenants to obtain longer tenancy agreements. This makes eminent social sense as it facilitates more permanent communities to be established with the consequent benefits to society.

We welcome and support this move.

With the sharp decline in rates of homeownership in the UK in the past decade, and the numbers of renters continuing to rise because of the housing shortage and high prices, longer tenancies would give people greater security in their homes, which many crave.

The security of a long tenure is particularly important for families and older people.

One of Barwell’s predecessors had announced in October 2013 that the government was to introduce new measures to encourage longer, fixed term, ‘family-friendly’ tenancies in the rental sector – although there were a number of flaws with these measures, it puts the Private Rented Sector (PRS) on the political agenda and is certainly is a good place for Barwell to start. Let’s hope he picks up and develops these measures in consultation with industry bodies in the PRS.

In our experience of the over 55s rental market, we know that many people want to sell their family home to downsize and rent as a lifestyle choice, provided they can find a suitable property with the security of a long tenure.

Our assured tenancies enable tenants to remain in their property for as long as they wish. Our tenants tell us that this is the biggest attraction of renting in retirement, as they have security of tenure for life. Let’s hope others in the rented sector will also benefit from longer tenancies soon.

Britain’s retirees increasingly optimistic about their future

According to the Inaugural Retirement Confidence Index* from McCarthy & Stone, the UK’s largest retirement housebuilder, retired people in the UK are currently exhibiting soaring levels of confidence.

Our own experience bears this out as our customers frequently mention they are looking forward to the future and the chance to do something new and exciting. For many this involves downsizing to rent a purpose-built retirement property. 74% of our tenants tell us that renting on an Assured Tenancy gives them security and peace of mind. Many say they have gained a new lease of life through making new friends, taking up new hobbies and regaining their independence. For some, moving to a different part of the country has given them a fresh start in a location they have always wanted to live.

Whilst downsizing into more appropriate homes may be a solution for some, a chronic shortage of suitable homes for older people may make this an impossible dream for many.
A report from Knight Frank^, ‘Retirement Housing 2016’ highlights that by 2037 three quarters of households are likely to be headed up by someone aged 65 or over. It also states that according to the University of Reading only 2 per cent of current housing stock is retirement housing. With an ageing population – there are an estimated 11 million people aged 65 and over in the UK today – the provision of suitable housing which meets the needs of older people is more crucial than ever. Knight Frank estimates that potential demand could reach 30,000 retirement units per year, however, current planning is for just 5,500 retirement housing units per year: a significant shortfall, which we believe needs immediate attention.

Without greater investment in retirement housing, many older people will be stuck in homes that no longer suit their needs. Consequently, there will be fewer homes available for those further down the ladder. Housing policy needs to address the question of under-occupancy today, otherwise our current housing crisis is only going worsen.

We applaud the optimism of today’s older people and we are doing all we can to support this by providing suitable, purpose-built retirement property for rent on Assured Tenancies across the UK. There is much more to be accomplished to encourage confidence in the retirement housing sector and we believe there are exciting times ahead for the Industry.



More people renting in retirement, according to new poll

A new poll of private renters by the National Landlords Association (NLA)* shows that the proportion of retired private renters has grown by 13 per cent since 2012 (approximately 220,000). It also highlights that 17 per cent of the retired private renting population live in the South East of England, with just 3 per cent in London and only 4 per cent in the North East.

House prices in each area no doubt have an impact on whether people can afford to buy but also to rent and with London being the least affordable for both its hardly surprising there are fewer retired renters.

In our experience many people in the South East also choose to sell up in retirement and rent, taking advantage of years of house price rises and releasing equity to invest in their future.
There are huge challenges ahead though for the retirement housing market.

One highlighted by the NLA is that the proportion of landlords who let to retired renters has almost halved since 2012. They found that just nine per cent of landlords said they currently let to retirees compared to 19 per cent in 2012.

The reasons stated are the issues renting to a more vulnerable section of the population and pension cuts, plus tax changes for landlords which means in expensive high demand areas they can only afford to rent to people with high paying jobs.

Another report a few weeks ago from Knight Frank^, ‘Retirement Housing 2016’ provided further insight into the state of the housing market for Britain’s retired and the housing challenges ahead.

The report highlights that by 2037 three quarters of households are likely to be headed up by someone aged 65 or over. It also points out that according to the University of Reading only 2 per cent of housing stock is retirement housing.

Current planning is for only 5,500 retirement housing units a year, but Knight Frank estimates that potential demand will reach 30,000 retirement units needed per year.

As Michael Ball, Professor of urban and property economics at the University of Reading says: “Within 10 to 15 years we might see retirement housing demand equalling today’s demand for starter homes.”

The UK is already experiencing a shortage of retirement homes which is preventing people from being able to downsize and this situation looks set to get worse.
Knight Frank estimates that the over-50s hold 66% of all housing wealth, equalling about £2.5 trillion – if they were able to downsize successfully, they would able to be free up much needed family homes whilst releasing equity.

Downsizing to a home with one less bedroom will release around £52,000 in equity on average across England and Wales, with large regional variations.
Over the next 20 years the demographics of UK are going to change quite significantly as we shift to being an older population. House building needs to reflect this changing demographic and provide enough suitable housing, for both renting and buying, to suit people’s needs as they get older, which in turn will free up homes for those further down the ladder.


Half of home movers looking to downsize

We were interested to read a report by Lloyds Bank* this week which suggested that nearly half (46%) of home movers in the UK plan to downsize in the next three years and could realise up to £200,000 as a result.

Downsizing was cited as the single most popular reason for moving and the average age for a downsizer is 53 years old.

The reasons for wanting to downsize varied, with 53% saying they wanted to move somewhere that better suited their circumstances, 39% saying they wanted to reduce bills or free equity and 31% wanted extra cash for retirement.

Mike Songer, mortgage director with Lloyds Bank suggested that whilst financial reasons are not always the main driver for downsizing, three quarters of people expect to profit from such a move.

He said: ‘There are definitely financial benefits to be gained from trading down, with an average potential windfall of £117,230 when moving from a detached home to a semi-detached house. Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties which could be perfect for young families about to take their next step up the property ladder,’ he added.

Unsurprisingly it was downsizers in the London area that make the most from downsizing with home owners making £201,052 on average from the sale of their home. Downsizing to rent a specialist retirement property is a good financial solution for many older people as it frees up all their capital.

This is borne out by research we undertook earlier this year which found that 35% of people over 50 wish to downsize from a larger family home to a retirement property more suitable for their needs. We receive many enquiries from older people who are choosing to take this option when they retire, attracted by the security of tenure that the assured tenancy offers, plus the ability to budget effectively as the monthly rent includes the services of the development and property maintenance costs giving them the financial freedom to really enjoy their retirement years.

Our research also highlighted that the majority of older people don’t want to put their feet up in retirement but are instead looking for adventure. 70% of over 50s said they wish to travel more, with more than a third (37%) wishing to travel several times a year. Having additional resources, for instance from the sale of a house, can help fund such plans plus the ability to ‘lock up leave’ when renting a purpose-built retirement property in a secure development brings added peace of mind to the traveller.


Todays 70 year olds more cheerful than ever

Some good news for those hitting 70 this year, it seems that many 70 year olds are happier now than they were at 60, according to researchers at the MRC Unit for Lifelong Health and Ageing at University College London
The National Survey for Health and Development which has followed the lives of 3,000 people born in 1946, found that they felt more cheerful, confident, optimistic, useful and relaxed as they entered their seventies.
This was in spite of the fact most reported suffering from at least one condition such as a bad back, arthritis and high blood pressure.
The findings mirror recent statistics from the Office of National Statistics covering data from 2012-2015 which found that those aged 65 to 79 years old are the happiest in Britain – with life satisfaction, happiness and feeling that life is worthwhile all peaking in this age group.
The researchers suggested that balancing work and family commitments may contribute to lower levels of happiness for those in their middle years, but by the time people retire they have more time to spend on activities that are good for their sense of well-being.
People do on the whole seem to be more optimistic about getting older these days and increasingly want to spend their retirement doing things they have always wanted to do such as traveling to far flung destinations.
Research we conducted earlier this year with people over 50 suggested that over 70% want to travel more when they retire, with more than a third (37% wanting to travel at least 2-3 times a year.
Making the most of retirement is something we should all be aiming to do so it’s important to plan now to make sure you have the finances in place to enjoy a long and happy retirement. For many this could mean downsizing and freeing up capital in their home.
Not only does this give people a little bit more money to spend it also frees them up to enjoy life free from all the worries that go with owning a home, such as unexpected repair bills and upkeep costs.
Take a tour of our website to see some of the current retirement properties that are available to rent.

Esther Rantzen suggests older people should downsize

TV presenter Esther Rantzen was featured in this week’s Sunday Times and said that older people should downsize and move to a smaller property to free up family homes for families and help ease the housing crisis. We couldn’t agree more.

Six years ago, Esther downsized to a two-bedroom flat from a large house in Hampstead so she is talking from personal experience.

Now 75, Ms Rantzen is increasingly becoming a consumer champion for issues affecting the elderly.

In 2012 she wrote an article on loneliness, which prompted a huge response from the public, and founded The Silver Line, a helpline to support elderly people. She also campaigns about the shortage of retirement accommodation.

She told the Sunday Times that millions of older people would be very happy to downsize if there was enough appropriate housing for them.

“We are not building comfortable, appropriate housing for older people, which is stupid because it would free up houses for families and you wouldn’t have little old ladies like me rattling around in a five-storey house.”

Esther Rantzen also mentions she disagrees with Baroness Bakewell who has suggested encouraging older people to downsize was “mean-spirited”. Far from being mean-spirited though it seems there are plenty of people that feel just like Esther Rantzen.

A report out this year from retirement housebuilder, McCarthy & Stone, Generation Stuck: Exploring the Reality of Downsizing in Later Life, suggested that a lack of downsizing options for the over 55s is creating what they term ‘Generation Stuck’. The report highlighted that despite one in three (33%) of the UK’s homeowners aged 55 and over considering or expecting to consider downsizing, a lack of suitable housing options is preventing them from moving.

The problem isn’t going away and the more people can talk about the issues facing older people and where they will live when they get older the better, then hopefully house builders and policy makers will start to take note.

Currently one in six people (10 million) are over 65 years old; by 2050 its predicted one in four (19 million) will be over 65. A quarter of the population cannot be ignored and the option to downsize to an aspirational property in a decent area should be available to all those that want to.

Over-50s Yearning for Adventure in Retirement

We recently conducted research with over 1000 retired people for a broadcast campaign in partnership with 4mediarelations, one of the UK’s leading broadcast consultancies.

We wanted to find out what the over 50s want to do in retirement and we found some interesting results!

Over 70% wish to travel more when they retire, with more than a third (37%) wishing to travel at least 2-3 times a year.

Rather than blowing all their money on one big trip, the over-50s plan to use their money wisely to make the most of retirement, with almost two thirds (63%) saying they do not intend to take their pension out as one lump sum.

However, fewer than half of people (43%) think their money will actually last them until their 80s or 90s, so it may be difficult for some to sustain this more adventurous side of retirement unless they plan ahead and ensure they have the finances in place to ensure a good standard of living.

The research also highlighted that 35% of people want to move in retirement and downsizing is one way they could release their equity and free up money for funding retirement.

I was delighted to speak to several radio stations across the UK, including BBC Radio Somerset, BBC Radio Suffolk, Sunrise Radio in Yorkshire, North Manchester FM and Radio Saltire in East Lothian about this research and it was certainly a new and enjoyable experience for me to spend a morning chatting with DJ’s up and down the country.

It was a great opportunity for us to spread the message about the positives of renting in retirement on assured tenancies to a large audience of listeners and the presenters were really interested to hear how the over 50s are becoming more adventurous and increasingly seeing retirement as a new and exciting stage in their lives.

I hope that people listening learnt more about the benefits renting can offer when they get older, and perhaps it will encourage them to start planning earlier for their own retirement, financially and inspirationally, so they can fulfil their retirement dreams too, whatever they may be.

Why Build to Rent is essential for older people too

The Build to Rent sector is of growing interest to investors. Last December Knight Frank said that £15bn had been invested in the sector, and its latest statistics suggest that institutional investors will commit to a total of £50bn by 2020.

Two large investors have also just signalled their entry into this sector. Grainger plc has committed £850m between now and 2020, whilst Legal & General Capital also announced that it is to become more involved in the ‘Build to Rent’ market in the UK. The company plans to spend £600 million providing 3,000 units to let. It also highlighted that in its view, the rental market in the UK is ‘dysfunctional’ and that for this to change, renting must become more affordable.

Much of the investment is aimed at young professionals working in urban areas. The first homes to be funded by Legal & General Capital will be in Bristol, Salford and Walthamstow. We are keen to see more investors targeting the retirement sector too.

Many older people want to downsize when they are older. A recent report from retirement housebuilders McCarthy and Stone called ‘Generation Stuck: Exploring the Reality of downsizing in later life’ highlighted that a third of the UK’s homeowners aged 55 and over are considering or expecting to consider downsizing. However most aren’t able to because of the shortage of specialist retirement homes.

More needs to be done to encourage build for rent that is affordable and appropriate for the needs of the older generation, especially given that by 2030 it is predicted that a quarter of the UK population will be aged 65 and over.

For an investor, the fact that a quarter of the population will be over 65 in less than 15 years’ time would suggest this is a market worth investing in and we hope that more investors and housebuilders will recognise this soon.

8,000 new specialist homes for older people is just the tip of the iceberg

We welcome the plans in yesterday’s autumn statement from the Chancellor, George Osborne to stimulate the housing market, in particular the 400,000 affordable homes to be built by 2020-21, including 8,000 specialist homes for older people and those with disabilities, as well as the 2% increase in council tax to fund elderly care.

These homes for older people are part of the Government’s Five Point Plan for housing to support housing supply and low cost home ownership. Measures include extending Right to buy scheme and the Equity Loan scheme, offering buyers with a 5% deposit a 5-year interest free loan to buy a new home; supporting SME builders and further reform of the planning system – amounting to over £20 billion investment in housing over the Spending Review period.

It was also announced that higher rates of Stamp Duty Land Tax (3% above current rates) will be charged on additional residential properties, such as buy to let and second homes from 1 April 2016, which will help fund the housing plans.

Whilst these are all positive measures, its unlikely 8,000 specialist homes will meet the needs of our ageing population. Currently one in six people (10 million) are over 65 years old; by 2050 it is predicted one in four (19 million) will be over 65. A report from Property Company Savills^ in October suggested that the UK will run out of purpose built retirement accommodation for older people if the construction industry cannot provide another 90,000 retirement properties in the next five years.

The Housing LIN/Elderly Accommodation Counsel (EAC)* also forecast a deficit of 240,000 bespoke retirement properties by 2030. At the moment less than 3% of housing in the pipeline is aimed at older people and yet, the over 65s will make up around a quarter of the population in 20 years times.

Many of the measures announced today including paying more money to developers to build “starter homes” – 200,000 of which will be sold at 20% below market value to first time buyers, and 10,000 new homes that tenants can live in at reduced rents whilst saving for a deposit – are aimed at younger people, with much less emphasis placed on the housing needs of older people.

As older people are going to make up a larger share of the population over the next 20 years, a higher proportion of the £20bn needs to be aimed at this end of the market. It will take time to build suitable, desirable homes that older people will want to downsize to, and failing to tackle this now is storing up even greater housing issues for the future.


Lifetime tenancies may no longer be available to new social housing tenants

It was revealed at the end of October that the Government plans to scrap lifetime tenancies for new social housing tenants in favour of fixed-term contacts.

Whilst councils and housing associations have been able to offer five-year fixed-term tenancies since 2012 – the numbers doing so are low. According to official figures* , just 13% of new general needs social housing lets were made on a fixed-term basis in 2014/15, compared with 9% in 2013/14.

This move is likely to mean that those no longer eligible for social housing may look to move to properties which are offered at market rent in the private sector. This migration from social to private housing will allow those who are desperately in need of accommodation to gain a home.

It’s widely recognised that there is not enough social housing to meet demand. The Chartered Institute of Housing** estimates that around 120,000 social homes have been lost in the past three years.

Therefore what is available should go to the most vulnerable. Lifetime tenancies may stop this happening as people who may not be the neediest in society are able to live there as long as they want, therefore taking up social homes that could be used for someone else.

In the private sector ‘assured tenancies’ are rare; however, we offer assured tenancy rents on the majority of properties to those aged 55 and over and have done so for over 20 years, recognising that the older sector of the market is looking for the peace of mind that comes from knowing that they can rent their property for as long as they choose.

Under an assured tenancy it is the tenant that chooses to give notice after the requisite period and move on, however the landlord cannot give notice, unless the terms of the tenancy have been breached.

With Government wanting to scrap lifetime tenancies for new social housing tenants we believe there is a viable option for non-vulnerable older people to move out of social housing into private rented retirement accommodation.

Given we are an ageing population, it’s likely more older people will have to rent in the private sector in the future so it’s reassuring they can do so with Girlings on an assured tenancy.