Seniors Housing & Healthcare Trends

LOS ANGELES: An insurance company/investment group is set to deliver a social revolution in over 60s living.

Five storeys up on the roof of a half-built development in the Surrey commuter town of West Byfleet, I’m pondering whether I’m witnessing the start of a profound social revolution, or just another dusty building site. This is Botanical Place, a pioneering “retirement village” planned and financed by Axa, the French insurance giant.

Axa and its Retirement Villages Group offshoot will have forked out £100 million to build this place by the time the first residents move in in December. Buyers and renters of the 196 apartments will be wooed with everything from a sauna and hydrotherapy pool to rooftop gardens and a private cinema.

The prize, if it works, is enormous, not just for Axa’s shareholders, but also perhaps for Britain. If there is one thing that could help solve the acute housing shortage, it would be if more 60, 70 and 80-year-olds rattling around in large family homes could be coaxed into more suitable accommodation.

The empty-nest syndrome is widespread and a growing impediment to the housing market. My generation sees their children leave home but stays put in houses with two, three or four more bedrooms than they really need. The property chain is gummed up. First-time buyers can’t afford starter homes because young families can’t trade up because we boomers won’t budge.

It’s inefficient. Fifteen million bedrooms in the homes of the over-65s lie empty, according to a report by the Centre for the Study of Financial Innovation in 2020. The number was heading for 20 million by 2024, it forecast, as the population of over-65s bulges by 185,000 every year. A net 50,000 fewer homes would need to be built each year if we oldies could only be persuaded to downsize.

The potential benefits go wider than the creaking property sector. By trading down, older people release equity from their homes, enabling them to pass on capital to the next generation and, often, home deposit cash to their grandchildren. It also releases cash for later life care.

Executed well, retirement villages can transform lives, reducing loneliness and giving seniors a rich range of services and activities on their doorstep. About one third of over-65s are not averse to the idea in theory. Some are fed up with maintenance chores and endlessly mowing a lawn no one plays on. Others just want a new chapter in their lives.

In practice, though, we don’t tend to do it. While in New Zealand, 7 per cent of over-65s live in retirement communities of one sort or another, the figure for Britain is just 0.6 per cent. We tend to be very emotionally attached to our family homes and see moving out of them as a personal defeat, one of those emphatic, irreversible steps closer to the grim reaper.

And the retirement property industry hasn’t helped itself. Residents, and their heirs, often feel ripped off. One major problem has been increases in service charges, over which the resident has no control. Another is resale values, which can be very poor.

Tim Seddon, chief executive of Retirement Villages Group, is convinced a new generation of independent retirement living operators can change the mood music. “I’m really evangelical about this. This has the potential to move the dial [in addressing the housing shortage].” The group already operates 16 retirement villages, but is now experimenting with a different business model.

Botanical Place is the first of four projects planned in or near the centre of towns. Residents, it says, will become much more integrated with the community. The complex has its own “town square” open to the public, while a chunk of the building will house the public library as a result of a deal with the council. Waitrose is just across the road. So is the local health centre. So is the parish church. So is the station (27 minutes to Waterloo).

It feels designed for a comparatively younger, more urban type with not a hint of those depressing symbols of the indignities of old age to come. “There’s not a red cord anywhere,” says Seddon, referring to the emergency pull ropes in care homes, though, he adds, the bathrooms are designed so they can be retrospectively fitted if wanted.

The scale model Seddon shows me looks like a luxury hotel. Indeed, the project will permanently employ a workforce of 50 to administer, clean, guard and maintain the place. Seddon contrasts his new generation of developer/operators who are in it for the long term with “traders”, as he calls them, who just build and move on.

The project is also trying a new pricing model, which it claims will help reassure customers anxious about hidden costs and charges. There is no traditional service charge. Instead, leasehold tenants pay an annual charge of £6,000 a year, which RVG says is far below the £10,500 cost of providing the service, and increases are strictly limited to the consumer prices index inflation rate.

The trade-off, however, is that RVG charges exiting leaseholders a deferred management fee (DMF) of up to 24 per cent of the original purchase price when they sell and leave, whether through death or to entering a care home. That’s a £180,000 hit on one of the project’s nicer £750,000 two-bedroom flats. DMFs are controversial, though they do help residents who tend to be asset rich but cash poor.

A lot of institutional money is poised to go into retirement villages if the British public starts to warm to them a bit more. Legal & General and Goldman Sachs (through its upmarket Riverstone operation in London) are among those staking an early claim.

There are hurdles galore, not least planning rules, which Seddon argues discriminate against projects spending more on communal services. There’s no “affordable housing” component at Botanical Place. The opacity and complexity of pricing also continues to blight the sector, while the lack of formal regulation is a red flag for some.

But it will be public attitudes that determine whether they really take off. For many, the stigma still outweighs the many attractions. The sight of an innocent grab bar is enough to give us the heebie-jeebies. Average entry ages are starting to come down, from 81 in 2023 to 79, according to a recent Knight Frank study. Popular culture has not treated the subject kindly. Perhaps the movie of The Thursday Murder Club, Richard Osman’s bestseller about smart, energetic pensioners solving a murder in an upmarket retirement village, out this summer, could help.

At Botanical Place, the show flat is kitted out and the on-site marketing begins next month. The pricing may look spicy, but many empty-nesters in the catchment area can certainly afford it. This is the prosperous stockbroker belt. Within three miles of the town, there are two houses priced on Rightmove at £25 million, while a typical four-bed detached is £1.2 million or more.

As Savills reported this week, £2.95 trillion of UK property is now owned by the over-60s, 98 per cent of it mortgage-free. The potential prize is colossal for the developer/operator which prices fairly and is prepared to be patient — and great news if it releases conventional homes for younger owners.