Any approach to older people’s housing will require some specialist housing alongside ordinary homes. Yet London is some way off reaching its targets for this type of building as set out in the London Plan. In some boroughs, the number of new units completed is actually negative, as existing older people’s accommodation is converted to other uses (usually student or general needs housing). More detailed information on this issue can be found in our data paper.

Currently, there is less of a shortage of care homes for older people than there is of specialist housing. However, there is a risk that demand for care homes will increase if older people cannot find housing that suits their needs. Providing specialist housing, including in retirement communities, can help mitigate this risk by helping people to live independently for longer.

There are a number of linked barriers to London getting the amount of older people’s housing it needs. Some are quite specific to the city, or even to certain parts of it, whereas others apply across England.

Commercial factors: supply of housing

London’s high land prices, high staff costs, and the relative profitability of other types of development mean that, in the absence of incentives or requirements, supply coming to the market is likely to be limited.

1. High land prices: These make it hard to develop properties which are affordable for older people but still meet their requirements – except perhaps at the top end of the market. This problem is particularly acute in inner London, where most of the projected growth in the older population will be. High land prices also make it hard to provide green space as part of a development – something which is important to many older people, especially as their mobility declines and it becomes harder to get to the countryside or to a park. Taken together, these factors mean that older people may choose to stay in their existing home even if it is hard for them to manage, because otherwise they will lose space or garden access.
2. Competition: In many cases, higher returns can be generated from student and general needs housing. Retirement community housing generally requires communal spaces, single-person flats with their own facilities, and sufficient space to meet accessibility needs. Its space-intensive nature thus makes it expensive to build.
3. Staffing: Many retirement communities and extra care settings require staff, for which costs can be higher in London. This compounds the difficulties of making a new development financially viable. Part of the challenge lies in how older people’s care is funded – a perennially important topic, but one outside the scope of this report to address.

The long-term impact of coronavirus and Brexit on London’s property market remains to be seen, but it may shift the commercial balance towards providing older people’s housing as the demand for (and price of) other housing types fall. Despite a perception that many older Londoners are keen to move to a less urban location, surveys since the pandemic began have shown that Londoners aged 65+ are the least likely age group to expect to move in the next year: ³²

Therefore their housing demand is unlikely to change much in the short term. However, there may be a fall in demand for student accommodation if universities maintain online teaching as an option. There may also be lower demand from working-age adults for certain types of smaller inner London properties, as commuting patterns change and people prioritise having a garden and perhaps working space in the home.

Commercial factors: demand for housing

Older Londoners are exacting customers when considering where and how to live. This is right and proper, given the significance of the decision. Our research suggests that some factors may be reducing the demand for specialist housing in London, including among people who might otherwise have considered it. Current supply is not enough to meet demand – and if these factors change, demand may increase further.

1. Lack of knowledge: Across all tenancy types, many older people (and “rising” older people) lack knowledge of the types of housing that might be available if they moved from their current home. In particular, they may lack knowledge of the differences between specialist housing and care homes. This issue is covered in more detail in Chapter 3 above.
2. Coronavirus fears: There have been some suggestions in the media that fear of coronavirus infection has made people more reluctant to move into care homes. This reluctance may also be due to worries about loneliness, given that communal activities and visits have been heavily restricted during the pandemic. We do not yet know whether this will change once infection rates are under control and vaccinations rolled out. Neither is it clear whether these fears apply to other types of specialist housing as well as care homes.
3. Transparency and competitiveness about cost: Concerns about unclear and unfair pricing in some care homes led to a Competition and Markets Authority investigation in 2016. ³³ While this does not affect other forms of older people’s housing, it may be affecting trust in the whole sector. There have been some concerns about leasehold older people’s flats being hard to sell because of high service charges and restrictions on who can buy them, ³⁴ although this is also part of a wider issue with the English leasehold system. ³⁵ These issues only affect a minority, but they may be putting off some people who would otherwise consider moving.

Policy and regulatory factors

Changes to the planning system – at the level of both local authority plans and individual applications – have the potential to increase the supply of older people’s housing in London.

1. Planning classes: Under the current system of planning regulation – which may be abolished with the new White Paper – most residential housing is in use class C3, while “care” facilities, which generally include nursing homes, are in use class C2. This system does not easily deal with “extra care” housing, where people have their own flat or apartment (rather than just a bedroom and bathroom) but where personal care is provided on site. It is also complicated when a proposed development includes both supported housing without personal care and a care home. This lack of clarity can slow down and complicate the planning permission process, for both new builds and changes of use. ³⁶
2. Delivery targets: The London Plan sets out delivery targets for the number of older people’s homes to be built in each borough. However, these are not always reflected in borough-level policies for developing older people’s housing or care home beds. Research by Irwin Mitchell in 2019 found that 19 out of London’s 32 borough local plans had neither a clear policy on the number and type of units needed in their area over a set time frame, nor site allocations set out. ³⁷
3. Definitions and quality standards: Care delivered in care homes is regulated by the Care Quality Commission, which also regulates hospitals and other healthcare settings. However, there is no statutory definition for other types of older people’s housing, or agreed quality standards in planning. Proponents of standards and regulations for the sector argue that this would increase consumer confidence and reduce reputation risk, thereby making it easier to attract investment for older people’s housing. ³⁸

These systemic policy factors can make the granting of planning permission for an older people’s housing development a difficult matter to predict. The process can also be rather slow, and some developers have told us that it has become slower in the last few years. Some developers and architects are concerned that the process of implementing the new planning White Paper will slow decision making even further. This adds risk to the system and makes it harder for developers to obtain financing for their projects. The problem is perhaps compounded by beliefs in some quarters that older people’s or specialist housing “does not work” in London or is not wanted by communities.

Of course, planning permission should never be a given – and some proposals for older people’s housing are not good enough and deserve to be turned down. Sometimes designs do not provide enough shared space, are not attractive from the inside or outside, and are not responsive to the needs of current and future residents. We need more, not less, genuine public engagement with decisions about what type of housing is built, what it looks like, and how it will be supported by local infrastructure such as public transport and NHS facilities. But a good planning process does not need to be a slow one. Greater investment in GLA and local authority planning departments, or better sharing of expertise between them, could allow for the development of a specialised cadre of planning officers who are expert in older people’s and specialised housing developments – thereby increasing the rate and quality of decision making and ultimately improving supply.