Uk’s Growing Retirement Villages Can Affect The Overall Housing Supply

By Author: Bradley Weiss
Total Articles: 272
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Pensioners are living longer, which contributes to the housing shortage because they remain longer in their homes. But retirement villages might change that.



With the UK’s Baby Boom generation now retiring, their numbers and their money seem to be the impetus for retirement village development. Importantly, this may be better for the health of the country’s pensioners and it frees up much-needed housing for younger families and individuals. But due to pricing - and some enviable amenities - the first generation of retirement villages is pretty much for the well off only.



That may change as the experience in other countries shows retirement villages can be affordable to the middle class. It’s interesting to consider how Britain has lagged the rest of the world in this regard. In the U.S., Canada, New Zealand, Australia and South Africa such developments are common.



Investors who look for capital growth land opportunities might give some thought to retirement villages for development. They are smaller than the homes most of their residents ...
... formerly occupied, are clustered in such ways as to encourage communal socialising, and they have amenities such as pools, spas, recreational halls and on-site emergency medical care. In New Zealand, 5.5 per cent of older people live in retirement villages, and in the US between 6 per cent and 12 per cent (depending on which state) are in these “grandma ghettos” (the term is unfortunate and largely inaccurate). But in the UK, these living arrangements are currently only available to 0.5 per cent of people over age 65.



And by current trends, land is what’s needed for these developments. Almost all are in the country, with the exception of London’s high profile first retirement village, Battersea Place in South London. The neighbourhood itself is on the rise due to transport infrastructure and the continued gentrification of all London districts and suburbs (including Clapham, Vauxhall and Kennington). Property fund managers might see opportunities in the numbers: one-bed and two-bed apartments sell for £650,000 to £800,000, while a three-bed penthouse is priced at £2.95 million.



The purchase price doesn’t cover all costs. Service charges are at least £1,000 per month. Then, when the retirees - or their heirs - sell, they are charged 30 per cent of the resale price or 20 per cent and half of capital gains. This is called a deferred membership fee. These are London prices of course - less expensive developments are found from Guernsey to Plymouth, Dover, Salisbury, Milton Keynes, Gloucester, Birmingham, Peterborough, Sheffield and Manchester.



What’s driving the new developments is the nature of the Baby Boomers themselves. Many have the money (e.g., cash from their homes and investments), and the inclination. Rather than looking at retirement communities as a march to the grave, they see it as freeing them from larger homes that took too much work to maintain. Retirement villages provide socialization and recreation that actually lessen the burden on the National Health Service: studies show that residents reduce their need for medical care after moving into such communities.



There’s also something in this for younger families looking to buy homes. As more pensioners leave their residences, those existing homes become available to younger working people. In a country where the home shortage is believed to be one million dwellings, it’s a move in the right direction.



For investors, the need to build everywhere provides capital growth opportunities. That might be in retirement villages or housing for younger people. Either way, the need continues to build. Planning authorities are unleashing more land every year to accommodate this - however by most assessments, not nearly enough.



Whether or not one invests in capital growth funds such as UK land, the stock market, gilts or exotic real assets such as antique cars, the balancing of investments should be discussed with an independent financial advisor. Everyone wants a comfortable, well-appointed retirement residence. Smart, successful investing is the path to get there.