UK housing crisis: The next problem area will be retirement homes

 
Jitesh Patel
Follow Jitesh
A woman, suffering from Alzheimer's dese
We must offer dignity and lifestyle, while averting a housing crisis in care homes (Source: Getty)

Talk of the housing crisis conjures up images of first time buyers trapped by sky high prices, as their income is syphoned off into rent.

But alongside the cash-strapped "generation rent", there's another age group at risk: the next crisis may well be in retirement homes.

At the heart of the difficulties in residential care lies the ageing of the UK population. The effects of improved life expectancy are most obvious among over 85s, for whom the cost of care is greatest and whose number is forecast to grow by 18 per cent over the next five years.

Read more: Why Help to Buy and its ilk won't boost housebuilding

The over 65s group is close behind at 12 per cent. At the same time, people are increasingly choosing new forms of accommodation in later life such as assisted living, relocating earlier while living for longer. Altogether this will generate a fresh tide in demand for residential care, set to rise 15 per cent between 2015/16 and 2020/211.

Presently swelling demand is outpacing supply, where a bottleneck is holding back investment. This is partly due to previous measures, as public budget cuts have whittled down the resources available for residential care, with spending on social care for over 65s falling 17.4 per cent between 2009/10 and 2013/142.

In some respects, the squeeze is still to come, as the introduction of the National Living Wage from April will inflate costs in this labour-intensive industry. Providers need to be able to expect, at a minimum, a long-term break-even scenario.

But a string of insolvencies among operators has already betrayed how difficult this is to achieve. We risk seeing private sector investment evaporate, precipitating a crisis.

What's needed is an attractive set of projects to unlock untapped institutional funds and deliver the high quality care facilities we need.

A viable new settlement would make use of existing public land to avoid high prices, in line with the initiatives of One Public Estate. Under this, local authorities control a total of over £60bn in assets not used in schools or housing, compared to just over £11bn in receipts.

The urgency of the challenge should not distract us from another, equally important objective, which is to modernise UK care homes. Whether this is achieved by new build or converted facilities, we must offer dignity and lifestyle, while averting a housing crisis in care homes.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles