With increasing undersupply and signs of government support, more investors are directing their attention and cash at retirement housing. Although companies such as Audley and McCarthy & Stone are already well established in the UK, there remains a massive opportunity for other developers. Demand is growing for homes that meet the needs and aspirations of downsizers and the retirement market.

Challenges remain in this market. Developers/operators typically need to provide homes at values that allow downsizers to release equity from their current home, which may be used to enhance their quality of life, pay for later-life care, or provide financial support for children and grandchildren. Keeping service charges affordable is also an important consideration, given that most downsizers will not have been accustomed to paying annual property fees and tend to be asset rich and cash poor.

Planning remains a hurdle for this sector. Currently, there is inconsistency in the way boroughs treat retirement housing. Whether schemes qualify for C3 ‘dwelling house’ or C2 ‘residential with care’ status depends on a whole range of opaque and confusing factors. The difference in Community Infrastructure Levy (CIL) and section 106 requirements for each class can make or break the financial viability of these schemes, which typically deliver higher levels of residents facilities than a typical residential scheme.

With a fundamental lack of suitable housing for downsizers in the capital, some retirees might look to move beyond the boundaries of the M25 (see More country, more space). Developers/operators have an opportunity to help meet the needs of the undersupplied, undercatered for, but rapidly growing downsizer market in London.

^{▲ Dovehouse Street, Chelsea}

^{Source: Savills Research}