The Mayhew Review: Future-Proofing Retirement Living.

Introduction

The Mayhew Review is an independent review of the retirement housing sector in the UK, designed to feed into the Older People’s Housing Task Force government initiative. The Review had a specific remit to analyse trends in supply and demand of retirement housing and to look at existing living arrangements across the wider housing market and specialist retirement communities. The findings of the Review were published in November 2022. Clearly there are many factors that will influence demand for retirement housing and while the Review did not consider them all, it does highlight the significant need to deliver more homes for older people. This note summarises the main points of the Review.

Demographic Case

By 2040 the UK population is projected to increase to 70.4 million and of this 70.4 million, 25% of people are expected to be aged over 65, compared to 19% in 2020.

Older people are living longer and remaining in their homes for longer but these homes are becoming increasingly under occupied as children move out. In 1980 the average household size was 2.48 persons but this has since decreased to 2.36 in 2020. If this fall did not occur, an additional 1.5 million homes would become available as more people would be living together and fewer homes would be required to house the population. If the trend continues, and in 2040 the average household size is 2.27 persons, 2.8 million fewer homes would have been made available over a 60-year period. This predicted trend means that the number of households will rise at a faster rate than the population, meaning that occupancy will shrink.

The Review forecasts that in 2040, 1.2 million of those aged between 75 and 84 will be living alone. This decreasing occupancy, combined with an increasing bedroom surplus means that it will become increasingly difficult and even more unaffordable for first time buyers to get on the housing ladder and growing families will struggle to move into larger houses. This problem also poses significant challenges for health and care.

The Mayhew Review finds that specialist retirement housing helps older people stay healthier for longer, especially when combined with constant access to care. Thus, reducing the strain on the NHS, delaying transfer into care homes, and freeing up housing for younger people. Therefore, the review puts forward the case for more retirement developments with access to care and facilities that enhance wellbeing. It goes on to estimate that for each bedroom added to the retirement stock, two to three are released in the wider housing market.

Trends in Retirement Living – Future Scenarios

The Review explores four sets of scenarios. The first is labelled ‘business as usual’, in which current patterns are simply pro-rated. At present an average of around 7,000 retirement homes are built annually out of a total 200,000 new builds. In the alternative set of scenarios, the report tests what would happen if there were a shift to a model in which a greater proportion of the population were to relocate into specialist retirement housing, The scenarios are:

• Business as usual: In this case, there would be 17.2 million people in the UK aged 65+ by 2040, an additional 4.3 million compared with 2020. There would be 12.15 million older households (3.65 million more than in 2020). Of the extra 3.65 million, 3.13 million would be in standard housing, 0.36 million in retirement housing, and 0.16 million in residential or nursing care.
• Scenario A: Assumes the rate of growth in specialist retirement developments would be 10,000 a year. This increased rate would result in 12.05 million older households, which is 100,000 fewer than the business as usual scenarios. There would be 100,000 fewer people in standard housing and 300,000 more living in retirement housing.
• Scenario B: This scenario is based on a growth rate of 30,000 specialist retirement developments per annum. This results in a projected 11.81 million older households, 340,000 fewer than ‘business as usual’. There would be 600,000 fewer people living in standard housing and 1 million more people living in retirement housing.
• Scenario C: It is assumed that the growth in specialist retirement developments would be higher, in this case 50,000 more retirement units a year. This output would result in 11.67 million older households (3.17 million more than in 2020), with 2.16 million of these additional people in standard housing, 1.34 million in retirement housing, and 0.33 million fewer people living in residential and nursing care.

Scenario C relative to business as usual shows the largest shift towards specialist accommodation and away from standard housing and residential care. This would help to reduce the problem of under occupancy and free up homes.

The report summarises the arguments for change that it puts forward, which are as follows:

• There is a severe shortage of retirement accommodation with access to care.
• There is increasing under-occupation of the existing housing stock which restricts the supply of family homes and pushes house prices up.
• The potential exists to release thousands of homes each year for younger people by building more retirement accommodation.
• To make retirement homes attractive they must be in viable communities in places where people want to live and must be of good quality with good access to care and other amenities.
• There is evidence that housing with care is good for health and wellbeing, and economies of scale mean that care costs are lower so there is alignment with health and social care prevention policies.
• Larger retirement developments are increasingly becoming the norm. They are able to provide a wider range of facilities and accommodation types, and to offer care.

Recommendations

The Review makes the following recommendations:

Build more retirement homes – Building more retirement housing would make more efficient use of the housing stock and help to reduce pressure on house prices. An increased building programme would displace people in both standard housing and residential care. The report recommends an accelerated programme of up to 50,000 new units each year.

Integrated retirement communities – Integrated retirement communities (IRCs) can provide care services and communal facilities. Only around 15 large IRCs have been built each year since 2010. Shortfalls in retirement home supply suggest this number should mirror trends in other countries like Australia or New Zealand. The report recommends a significant expansion in the building of IRCs across all regions.

Repurpose high streets – By 2040, most areas will see people aged 65+ make up 25-30% of the population. Meanwhile, changing habits combined with the pandemic have seen the number of vacant properties on high streets increase. As a result, there is interest in repurposing town centre buildings to provide retirement housing. The report recommends that integrated retirement living should include more developments in town centres as part of the levelling up process and local regeneration programmes.

Reforms to planning rules – The report recommends closer working between planning and social care departments and that planning departments put retirement housing on a ‘level playing field’ with other building developments.

Tax incentives and grants – Various financial incentives could be applied to encourage downsizing by last-time buyers and home improvements by those who purchase from them. Housing transactions have increased following reductions in stamp duty, while grants could be provided for the least energy efficient homes. Where downsizing is not an option, older people should be helped to adapt their homes. The report recommends that the government research financial incentives that would encourage downsizing among older households.

Financial advice and paying for care – There is insufficient advice to homeowners who would like to move into more suitable accommodation in later life. The report recommends that financial advice is made available for last-time buyers looking to move into retirement housing and residents living in retirement housing should receive a social care assessment so that the cost of care received counts towards the social care cap.

The report makes one final overall recommendation which is that the Government’s Older People’s Housing Task Force should be mandated to implement the Review’s recommendations and report on outcomes.

Potential Opportunities for Pegasus Group

The ageing population, combined with current and future need for retirement housing, results in a number of potential opportunities for Pegasus Group:

• An ageing population means retirement living is going to become increasingly important. This will see the number of older person’s accommodation developments increase as the demand is realised. The benefits of shifting towards more older people living in specialist accommodation are felt across different demographic groups as houses are freed up by older people moving out of their homes. This means Pegasus Group could potentially see more planning applications work for traditional housing schemes which include an element of retirement living.
• With more developments likely to include older person’s accommodation, these developments will be required to prove the need for such accommodation. The Economics team has the ability to complete need assessments for older person’s accommodation, as well as analysing the associated socio-economic benefits of such schemes.
• There could be more scope to make the case for sites in local plan consultations that can deliver retirement living schemes.
• Opportunity for involvement in Community Infrastructure Levy (CIL) examinations via representations, for example.
• Increased involvement for design teams when preparing master plans for specialist older persons’ accommodation.
• Given the company works for the main players in the sector, it can put promoters in touch with them early on in the process to ensure that design and other planning promotional work meets their requirements.