As our City of Tomorrow campaign concludes, we are taking a look at London as a megacity in the future. Using research available, we have asked experts from across our business to reflect on London as the population hits 10 million, the demographic shift accompanying this, and the practical steps that need to be taken now to deliver sustainable growth. 

In our next article, Senior Surveyor Harry Charman and Partner Sam Stackhouse discuss the crucial role senior living development can play in meeting the capital's wider housing supply. 

HOW SENIOR LIVING CAN PLAY A KEY ROLE IN LONDON'S HOUSING DELIVERY

Despite London being seen as a young city, there are still 1.1 million over 65’s who live here, a figure that is set to rise significantly as London heads towards a city of 10 million. Our projections show that over the next 15 years, the proportion of over 65’s is expected to grow by 50%, with Early Retirement Years (65-79) and Later Retirement Years (80+) as two of the fastest-growing population segments.

Whilst many, particularly those younger retirees, are likely to remain in their own homes or with families, the need for more dedicated senior living accommodation will only grow. To date, there has been relatively limited senior living development across London, meaning that there are few options available.

At the same time, senior living development can play a crucial role in meeting the capital’s wider housing supply, freeing up family-sized housing stock by giving older inhabitants an attractive and appropriate next move. In a city where the supply of land is constrained, particularly for larger family housing typologies, ensuring the delivery of high-quality senior living accommodation will play an important role in the coming years and serve a broader public benefit.

WHERE IS THE GAP IN THE MARKET?

In recent years, senior living development in London has primarily focused on ultra-high-end schemes located in Zones 1-2, which are inaccessible to the majority of over 65s in London due to affordability. These developments typically provide extensive amenities but have significant barriers to entry in terms of cost, and consequently, sales rates can be prolonged.

By contrast, the mid-market within London is significantly less established, particularly in comparison to the wider South East. Few extra care and senior living developers are actively targeting sites due to a testing planning backdrop as well as challenging market dynamics.

There are some exceptions, particularly in outer London boroughs, where smaller retirement apartment schemes are being delivered. However, these schemes typically provide less integrated care and amenities. At present, there is a gap in the market for mid-market retirement living with care in London, so what is preventing greater delivery?

CONSTRAINTS TO DELIVERY

• Viability for senior living schemes is typically more challenging due to higher build costs associated with the provision of amenity space and slower absorption rates. Typically, occupiers want to see the finished product rather than reserving off-plan.
• This is exacerbated by policies within the London Plan which still require affordable housing and CIL contributions (Mayoral CIL and, in some cases, local CIL) for senior living schemes to the same degree as typical residential schemes.
• Affordable contributions typically expect on-site delivery and, in many cases, delivery of affordable C3 residential rather than affordable senior living, which can be a challenge for smaller sites, given the need for separate cores. This, in itself, further constrains potential supply in the market.
• We are therefore seeing a highly competitive land market where senior living developers struggle to compete with other land uses.

WHAT NEEDS TO CHANGE?

With London facing an acute housing and affordability crisis, finding ways to free up family housing would significantly benefit the city as a whole and offer more choices to its older generations.

For us, the key areas are:

• Greater tenure diversity in the market, with the potential expansion of affordable senior living tenures as well as further private rental options, to provide more choices to people with different income profiles and aspirations.
• More significant consideration for allocating sites for extra care / C2 Use Class.
• A more flexible approach to developer contributions which recognises that schemes, particularly those that provide additional care, offer a valuable service that should offset developer contributions.
• Above all, a greater understanding and recognition from policymakers of the operational model of living with care and the social and economic benefits that specialist senior living housing can bring to communities across London – as well as the consequences of inaction.

Above all, greater public sector support for senior living would enable developers to overcome viability challenges more efficiently, and investment in the capital would be forthcoming if the conditions were right.