More British baby boomers were born in 1947 than in any other year of their generation (ie, those born between 1946 and 1964). That means that 2017 will see more people turning 70 than at any time after the Second World War. Given that today's 70-year-olds can expect to live to 84 (male) and 86 (female), it's clear that the demand for assisted living is set to increase. The question is, how are we going to meet that demand?

In the UK, the retirement sector stock has historically focused on sheltered housing, which provides limited service to residents. Only 0.5 per cent of over-65s live in assisted living developments, compared with 5.6 per cent in North America, 5.25 per cent in Australia and 5 per cent in New Zealand.

But the good news is that we are beginning to see far greater focus and delivery of assisted living developments in the UK, encouraged by a number of factors:

Consumer demand

Operators right across the board are seeing a growing demand for assisted living, which, together with rising sales rates, is driving investor appetite. Fuelling the demand, however, is not an immediate need for care, but a desire to downsize to a retirement community that allows residents to 'age in place' and, as their health and social needs change, to eventually be able to benefit from care at home.

ARCO consumer code

Most assisted living providers are part of a trade body called Associated Retirement Community Operators (ARCO), and the implementation of its consumer code has further raised standards within the sector during purchase and occupation.

Planning

Many assisted living delopments are classed C2 which, in many cases, will provide savings on the provision of affordable housing and Community Infrastructure Levey (CIL). In some areas local authorities have modified local planning policy to allow assisted living in areas that prohibit residential, and also for the delivery of assisted living to count towards their housing targets.

Investment

Levels within the assisted living sector are increasing as investors are attracted by the demographic projections and current under-supply. Having invested in student housing and private rented sector, investors see this as the net asset class to invest in.

Event fees

These are payable when the leaseholder resells or sub-lets the property, or in certain other events, and help to enable the delivery of assisted living with its high set-up and ongoing costs. Event fees were subject to work by the Law commission in 2016 and their recommendations will be published soon.<

Not-for-profit groups

These operators are key to the delivery of many impressive assisted living schemes that have pushed the boundaries in terms of scale of developments and height. Rather than just a 'for sale' model, schemes have included shared ownership and rental units. We expect to see the private sector look at these tenure types to develop the growth in the market.

Momentum is growing in the UK assisted living sector but in order to meet rising demand, it needs focus and help from the Government. Australia and New Zealand both have federal retirement villages Acts which protect the interest of the consumer and the operator. Our Government should look at similar leglistation to open up the market to new operators and investment. Equally, clear direction to local authorities will help increase supply.

Our clients in the established markets overseas are often surprised at the lack of market supply in the UK. With support from the Government, if the UK can apply the measures that have made the established markets successful for operators, investors and most importantly consumers, then our assisted living sector will see great growth and innovation.

Further information

Contact Savills Retirement Living