Demos Daily: Unlocking the housing market


Since many elderly people have been confined to their homes, suitable housing arrangements have never been more important to their wellbeing. Having good access to care, facilities and necessary goods and services are crucial to maintaining good physical and mental health, but now that going outside may not be possible, and other forms of help from friends and family are not as readily available, we should be looking at how better housing arrangements can help improve the lives of a generation going through unprecedented challenges.

Retirement housing schemes are often considered to be the best solution, and in 2017 Demos produced Unlocking the Housing Market, a report looking at how to solve the severe shortage in retirement housing, and looking at how to increase both the supply of such housing, and the demand. We recommended making it easier and cheaper to build retirement housing by easing regulations, making sure that people are made aware of their housing options as they age, and to remove barriers that stop people moving.

Read the report here, or the executive summary below.

Executive summary

The housing shortage is now one of our top domestic political issues, at the forefront of the government’s and opposition’s positioning during the 2017 general election and party conferences. However, policy development has thus far been focused on first time buyers and affordable housing – to the detriment of an appreciation of the wider problem. A shortage of even greater magnitude (1) is now being experienced among older people, a large proportion of whom cannot find suitable homes to downsize into. There is a dearth of specialist retirement housing, so hundreds of thousands of older people are stuck in unsuitable homes, which has a negative impact on their health. This is also stagnating the housing market by thwarting growing families (and, in turn, first and second time buyers) from moving up the housing ladder.

The housing white paper, published in February 2017, identified this as one of the many issues associated with what it described as ‘the broken housing market’. (2) It alludes to the need for a ‘conversation’ with a range of stakeholders, including specialist retirement developers, to help develop strategies to support older people in making the right housing choices as well as improve the volume and range of housing options – in other words, ‘demand’ and ‘supply’. In this paper, we speak directly to this issue in anticipation of such a conversation. We consider how to support older people in their move to retirement housing, through a combination of financial incentives, and practical and emotional support. We also explore the ways in which current barriers to the building of more retirement developments (everything from downsizer housing through to extra care options) can be overcome through an exemption to affordable housing and Community Infrastructure Levy (CIL) contributions.

Supporting older people to move into retirement housing

We carried out focus groups with middle-aged and older people to test a variety of policy ideas and developed a support package we consider to have the most impact. This helps older people move into retirement developments and boost their local visibility.

We recommend that the government should:

  • consider introducing a stamp duty exemption for older people moving to retirement housing targeted (at first) on those with lower value homes, to establish its efficacy; in a subsequent extension use some of the increased revenue for a progressive reduction of stamp duty for other age groups
  • offer an equity loan targeted at older people with lower levels of housing equity to bridge the gap between the sale price of their home and the purchase price of a retirement property – mirroring the highly impactful Help to Buy scheme
  • integrate advice on downsizing and retirement housing options (recognising the key role housing assets play in tackling pensioner poverty and paying for care) into wider pensions and care funding advice, to coincide with new care funding proposals that may come about after a green paper next year

We recommend that the industry should:

  • offer practical help packages for prospective buyers, as some already do, including help to pack, move, connect utilities etc, overseen by a ‘key person’ to provide reassurance and consistency throughout the move
  • provide wider outreach to the community, including where possible ‘try before you buy’ stays by developers who can manage such a scheme, and/or social opportunities for local older people to boost awareness of developments and to help form social networks

However, one of the key messages from our research is that helping older people overcome their reluctance to downsize would not resolve all the problems facing the retirement housing market. If anything, it could have a negative effect while supply remains so constrained. Unlocking barriers to supply is fundamental to the future health of the market.

Improving the supply of retirement housing

There are two main barriers to supply in the current market: lack of recognition of the housing needs of older people in local plans and a planning charges regime that renders retirement developments inherently uncompetitive against general needs housing and retail developments. The result is that retirement developers are often out-bid for land for their sites, or spend excessive amounts of time and money negotiating and appealing planning decisions and/or affordable housing contributions.

The housing white paper announced a review of national planning guidance that would ensure local plans included a proper assessment of older people’s housing needs. (3) This is a very welcome step and long overdue, but the charging structures underpinning these plans remain in place. In this report, we present our findings from economic modelling carried out to establish the impact of the current planning charges regime on different types of retirement development. The findings are conclusive: affordable housing contributions, and CIL charges, fundamentally undermine the viability of retirement developments in all their forms. Their presence also paves the way for protracted negotiations and costly appeals, local discretion and uncertainty in the market – regardless of the level at which they are set.

Our modelling was based on land and build prices in the South East in 2017. The South East tends to be more viable for building retirement housing than other regions of England where land prices are often just as high but the house prices of potential customers (and therefore their spending power) are considerably lower. We used a conservative CIL rate of £140 per square metre – a quarter of what it can be in some areas. Even under this favourable environment, a 50 per cent reduction in section 106 contributions (see explanation in Box 10) is the bare minimum needed for some developments, while others still need a full exemption to be viable.

With these points in mind, we recommend that there should be an exemption to section 106 contributions and CIL for retirement developments. Although extra care housing is often already exempt from these charges because it has the planning category C2, creating a new planning category (eg C2b) for all retirement developments eligible for this exemption would provide clarity in local plans and planning processes.

We recommend this policy for two reasons:

  • The social value case for retirement housing is overwhelming. If one considers the cost savings to health and care services, the wider benefits to loneliness rates and social networks built, the assets released to tackle pensioner poverty, and the number of family homes that can be freed up (and housing chain moves created) when older people can move to more appropriate property – it is clear that, as we argued in The Top of the Ladder, retirement housing has the same social value as affordable housing.
  • Build volumes have been sluggish for years, meeting the needs of only a fraction of a percentage of the older people interested in buying a retirement property. While nearly 3 million older people are interested in retirement housing, necessitating an estimated 30,000 new units per year, (4) current retirement developers have only been managing to build on average 7,200 units per year for the last five years. (5) Unsurprisingly, sizeable waiting lists are common, and yet very few new entrants to this market are forthcoming – in part due to the difficulty in making developments viable under the current section 106 and CIL system. Only a radical shift in policy on this front will enable the market to expand at the rate necessary to meet demand.

An exemption policy responds to the clear evidence of the choke hold planning charges have on the market and is justified both by the considerable social value and the hard economic benefits of retirement developments. Only such a step would provide the shot in the arm the market needs to boost build volumes rapidly (via current providers, and in attracting new providers) to help meet the government’s wider housing targets. It is also the only step that would also overcome the very real problems of local variability and unpredictability of the current planning landscape, creating a consistent approach nation-wide, while also doing away with the costly and lengthy negotiation and appeals processes related to section 106 contributions that currently hamper the building of developments.

The housing white paper stated that it would look closely at the older people’s housing market, and that policy makers were open to conversations with the industry on how best to grow supply and demand. (6) We hope that these findings – a combination of insights from older people themselves regarding their views of retirement housing, as well as economic modelling, both informed by insights from retirement developers – will provide a good starting point on which to build future dialogue.


(1) The UK currently builds around half of the general needs housing it needs annually, but one can argue that the retirement housing market is supplying less than a quarter of

(2) DCLG, Fixing Our Broken Housing Market, Cm 9352, Dept for Communities and Local Government, 2017, /Fixing_our_broken_housing_market_-_print_ready_version.pdf (accessed 26 Oct 2017).

(3) Ibid

(4) Knight Frank, ‘Retirement housing 2016’, 2017, 24 Oct 2017).

(5) Inspired Villages, The Right Size Report: Mapping the supply and demand of Britain’s retirement housing in 2017 and beyond, 2017, size-report/ (accessed 24 Oct 2017).

(6) DCLG, Fixing Our Broken Housing Market.