People are living longer. This isn’t an old platitude – its fact. Millennials are due to be the first generation with a life expectancy of 100. But as the Prime Minister’s decision to create the Minister for loneliness last month highlights, we need to not only celebrate living longer but also grapple with the challenges that it poses – housing being a key concern.
However, we think that the housing sector may have already stumbled on to the solution.
Build-to-rent has been a buzzword in the industry for the past year, and has just reached the exciting point of over 100,000 units in development. It started as a London trend but now is now spreading to the rest of the UK, with Glasgow and Manchester stepping up to the plate and development numbers looking promising. With the pipeline looking strong, it’s time to explore the opportunities of the sector more widely, and the opportunity of a retirement build-to-rent model.
Traditional retirement living is not for everyone. Yes, people do want a community, they may want some more tailored accommodation and perhaps knowing that a warden is on the end of the phone can be a relief. However, not everyone wants these characteristics in the context of traditional retirement living.
Moreover, retirement flats do not always fit everyone’s circumstances. They are often a slower turnaround in the commercial market, and do not face the same growth that conventional properties do. That’s not to say that they don’t offer good returns, but rather, that they don’t always suit circumstances that can quickly change where a quick sell can be beneficial. Retirement properties also come with some of the burdens of traditional homeownership that many retirees seek to escape – maintenance cost and leases.
This new approach to the sector isn’t just good for renters, builder-operators have the opportunity of longer term leases with a consistent stream of income. Builder-operators also look to benefit from a market with a promising future, enabling them to deliver a consistent output of units.
This approach to the sector could also prompt a rise in the availability of family homes, which are desperately short in city centres. As high-quality build-to-rent units offer an alternative to retirement properties, downsizers will have an attractive opportunity to move, creating a new stock of family homes for the next generation.