Pace of Change Stalls Despite Needs Increasing

New research produced by global property consultancy Knight Frank and law firm Irwin Mitchell reveal that planning remains one of the largest challenges for the Seniors Housing market as nearly a third of councils across England remain unprepared to provide suitable housing for their ageing populations.

Just under a third  (32%) of local authorities still do not have clear policies in place to support housing for seniors according to new research from Knight Frank and Irwin Mitchell: Unlocking Potential - Real Estate: Unlocking Potential for Seniors Housing Development (irwinmitchell.com).This significant shortcoming in the level of planning for seniors housing is particularly worrying given the UK’s ageing population- it is forecast that the number of people aged over 65 will increase to over 15 million or to one in four of us by 2043.

The new survey builds on similar research carried out in 2017, 2020 and 2022, which ranked local authorities between ‘A’ and ‘D according to the provisions in their local plans towards seniors housing.* Those local authorities with an A rating had clear policies indicating details of the required number of dwellings and care home beds and how this will be achieved together with specific site allocations for such development, whereas those with a D rating had neither clear policies nor site allocation. 

This year’s survey results (below) found that out of 326 local authorities in England 75 (23 %) were graded A, 100 (33.7%) were graded B, 47 (14.4%) were graded C and 104 (31.9%) were graded D.

Oliver Knight, Partner and Head of Residential Research at Knight Frank said: “While previous research has shown significant progress, our latest analysis suggests that over the last two years, the pace of change has stalled. 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. The appetite from investors and developers to deliver more age-appropriate housing is clear and growing. A more consistent and supportive policy environment will unlock more supply, more propositions, and more choice for seniors.”

Expert Opinion

“Planning remains one of the biggest challenges facing the seniors housing sector in England. It’s now 2024, seven years since we started running this survey, and there are still less than a quarter of A graded local authorities – only 75 out of 326 that have both clear policies in place and site allocations.

"The number of councils not adequately planning for an ageing population remains significant. More concerningly, the rate of change has stalled over the last two years, meaning that we are failing to make progress just when the need is becoming increasingly acute.

“This year’s survey is released in the run up to a general election and at the end of a period of unprecedented political turmoil. Since the last report was published there have been two changes of Prime Minister, three Secretaries of State at DLUHC and six Housing Ministers. We have seen the Levelling-Up & Regeneration Act 2023 enter the statute books, major amendments made to the NPPF, and the publication of more than a dozen consultations on a wide variety of proposed reforms to the planning system.

“Against that background, the policy inertia that we have experienced is disappointing, but probably not surprising. We have seen a decline in the number of new Local Plans as several local authorities have either delayed or withdrawn their local plans as they try to get to grips with ever moving and changing government policy.” Nicola Gooch, Planning partner at Irwin Mitchell

However, it is not all gloom. Despite this inertia, Knight Frank & Irwin Mitchell believe a sense of urgency over the need to get behind the sector does finally seem to be taking hold. The Older Person’s Housing Taskforce is due to report later this year, and the Government’s support for the sector has been recognised both in greater recognition in the NPPF itself, but also in the Levelling-Up & Regeneration Act 2024. LURA contains provisions which, when brought into effect, will place the Secretary of State under a specific legal duty to provide detailed guidance on how local authorities should plan to meet the needs of the elderly population.

The introduction of National Development Management Policies, which sit alongside (and in some cases override) a Council’s Local Plan policies, have the potential to make a huge difference to the sector and could, if the Government chose, render this research completely redundant.

There are also new entrants and increased activity in the market, with developers such as Untold Living entering the market, and rental products from existing providers, really starting to take hold.

Gooch concludes: “Whilst the last two years have been extremely challenging for the sector, it is starting to feel as if the supportive policy environment that we need to enable the sector to thrive might, finally, be in reach. However, we certainly need both local and national government to take a pro-active approach if we are to unlock the potential of senior housing in England. There is still a long way to go before the necessary support is in place to deliver our population’s elderly housing needs in full.

Knight Frank and Irwin Mitchell have also updated their research to reveal the fifteen opportunity areas ripe for development of seniors’ housing across England. Using a matrix looking at both the planning scores and local economic/ demographic statistics,*** the research distinguished areas where there is clear potential for seniors housing  to develop, as well as those areas where local factors are creating a barrier to progress. 

The results are as follows:

Top 15 for Private Senior Housing Accommodation: Kensington & Chelsea, Camden, Wandsworth, Elmbridge, Southwark, Brent, Hounslow, Tunbridge Wells, Woking, East Hertfordshire, Mole Valley, Bracknell Forest, Chichester, Brentwood, Havering.

Top 15 for Affordable Seniors Housing Accommodation: Southwark, Camden, Kensington & Chelsea, Manchester, Brent, Wandsworth, Central Bedfordshire, Hounslow, Tower Hamlets, County Durham, Hackney, Northumberland, Liverpool, Wakefield, Bracknell Forest

Despite the research pointing to a static picture at a national level in relation to the planning scores, several new entrants have made their way into the top fifteen of the seniors housing opportunity rankings. There are five new entrants within the private ranking, including Wandsworth and Elmbridge which now rank third and fourth respectively.

Other new entrants include Mole Valley (11th), Chichester (13th) and Brentwood (14th). Mole Valley and Chichester have rocketed into the top fifteen, having ranked 190th and 239th in 2022. Both have strong underlying demographic and housing market fundamentals, but a significantly improved planning policy position between 2022 and 2024 (from D to A) has underpinned their move up the rankings.

The number of London boroughs appearing in the top fifteen in the private opportunity area rankings continues to increase, from two in 2020 to seven in 2024.

In terms of new homes, 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. Delivery was weighted towards homes within Integrated Retirement Communities (IRC), which deliver larger communities with higher levels of services and supported by an increase in the volume of private capital entering the market.

However, according to Oliver Knight, “While delivery has picked up it remains significantly short of need. The UK’s population is ageing rapidly. Over the next 20 years, there will be an additional four million seniors living in the UK. Independent reviews of the sector suggest up to 50,000 new seniors housing units are required annually to keep up with projected demand – over the past five years just 37,000 homes have been built.”

Other Trends in Seniors Housing the Research Notes

• 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.
• The evolution of the seniors housing model to cater to a broader range of residents. This includes a trend towards larger developments, typically with 60-200 units. The planning pipeline suggests this trend will continue.
• Increasing development activity in urban locations.
• 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. An analysis of the pipeline suggests total private rental units will nearly double to just shy of 10,000 by 2027.
• Stronger appetite from new and existing market players to deliver more age-appropriate housing.

A link to the full report is found here: Unlocking Potential - Real Estate: Unlocking Potential for Seniors Housing Development (irwinmitchell.com)