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How The Ageing Of The Uk Population Impacts Housing
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It’s no longer unusual for ageing Britons to experience their fourth generation of progeny. While healthy seniors live longer in their homes, they may wish to move.
Throughout the developed world, advances in nutrition, hygiene and medicine have led to longer lives and greater independence for seniors. While this certainly is welcomed as good news, it nonetheless also introduces a different dynamic in national economics and social planning.
To understand the impact of the UK’s ageing population, it helps to confront some key facts:
1. Over-65 age group already up - Between 1982 and 2007, this age group increased by 16 per cent, growing from 8.5 million to 9.8 million Britons.
2. Over-65 age group will get even bigger - By the year 2032, there will be a 66 per cent increase in the size of the 65+ age demographic.
3. Over-65 age group will be almost one quarter of the population - This increase by 2032 will put retired people at 23 per cent of the population.
4. Over-85 increasing the most - More than 1.3 million people are in this "oldest kid" category, double what it was 30 years ago. Almost none work and therefore are entirely dependent on pensions, family and the public coffers for support.
What’s particularly significant, from an economics standpoint, is that the ratio of working people to pensioners has gone down since the 1980s and will continue to decline short of a new baby boom. Currently, there are 3.2 working people for every retired person in the UK, but that number will decline to 2.8 by 2033.
Those are facts that address the pension system. But what's less reported is how our surprisingly healthy seniors might contribute to the country’s protracted housing shortage. Former Planning minister Nick Boles went on record in 2013 by stating that it was the elderly, more than immigrants, who are placing the greatest pressures on housing needs in the UK. Which provides interesting news to those who consider alternative investments, such as senior housing, for their asset growth potential.
"Our population has grown and we have not built enough houses to keep pace with it," Boles said, as reported by the Daily Telegraph. "It’s important to remember the majority of that population growth has not been as a result of immigration. The majority of that growth, about two thirds, has been as a result of ageing.” He goes on to point out the plethora of families that now have four generations - and that they don’t all live in the same house.
Addressing a part of this problem is the Campaign for Housing in Later Life (CHLL), an organisation launched in 2013. Notably, only 1 per cent of Britons live in retirement housing; this compares to 17 per cent in the US and 13 per cent in Austria. Given the ageing statistics cited above, there is a need to increase the kinds of developments that are appropriate for this age group.
If those options were available and attractive to seniors, it could free up the estimated £400 billion worth of homes they currently occupy. Often, that means one person occupying a much larger home than they need. The Demos think tank (a cross-party organisation) published a report in 2013 that details how almost 3.3 million properties - two million of which are three-bedroom homes - could be freed up for occupancy by younger families. The sales of these homes would also free up cash to supplement seniors’ overall wherewithal. The report also emphasizes that new, seniors-designated housing needs to be appealing; only about 150,000 retirement units exist in the private sector currently.
CHLL maintains that planning regulations stand in the way of developing more senior housing (which, it bears noting, involves a mix of communal and private quarters, with on-hand staff to provide assistance as needed).
Relaxed planning processes, allowing more local control, has helped increase housing stock in the UK, as property fund management companies are now able to more confidently buy and develop land for residential construction. Public policy also includes better lending strategies, such as the Help to Buy scheme, making first-time and upgrade purchases more accessible. The CHLL advocates for a broader application of Help to Buy that will enable lower-income seniors to qualify for senior housing.
For those interested in land investment, all forms of housing provide multiple opportunities to achieve asset growth given the continued increase in housing for the UK's growing population. But before taking an equity or lender position, investors are strongly advised to discuss it with an independent financial advisor with experience in the breadth of investment opportunities.
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