The UK is heading rapidly towards a retirement housing crisis as planning taxes choke development and Government policies, such as Help to Buy, favour younger home owners, a leading think tank has warned.
Development taxes, including the so-called “section 106” for affordable housing, “fundamentally undermine the viability” of building retirement homes, according to Demos.
In order to meet demand, 30,000 new retirement properties need to be built every year, but the rate of increase is just 7,200 per year, and while around 25pc of older people say they would buy a retirement home, there are enough for just 2.7pc to do so.
Demos said that local authorities had not recognised the need to include enough retirement homes in their local plans, and that long negotiations and costly appeals processes mean retirement developers are often outbid for land.
Government policy currently favours first-time buyers, with programmes such Help to Buy, which provides a loan with a 5pc deposit, and shared ownership homes, rather than promoting downsizing properties.
Demos argued that a shift in priorities would cause a “positive chain reaction”, with more support for older buyers helping to open up homes for younger families to move into. Previous research by Demos found that if half of those who wanted to downsize did so, it would free up 3.5m homes.
Demos found the payouts made developing homes for older people less competitive than other residential and commercial property, partly because they have higher build costs and must have more communal areas.
Council development taxes are levied per square metre, and retirement home builders usually must pay more because they have to pay taxes on their communal facilities, which cannot be sold. Demos said that the “social value case for retirement housing is overwhelming”, and that only a radical solution would be able to increase volumes.
The report’s recommendations also include scrapping stamp duty for older people with lower-value homes who are moving to retirement housing, and a Help to Buy-type scheme for older people, to bridge the gap between the equity in their home and the price of a new retirement property