Ahead of the Retirement Living and Care Homes UK conference on December 4th we sat down with Verity Knight and Anthony Oldfield of conference sponsors JLL to discuss the current state and prospects of these sectors. Verity shared her expertise on the Care Home market and Anthony on Retirement Living…
Q1: What’s the current state of the care home and retirement living sectors?
Verity:
The care home sector is seeing exceptional levels of capital inflow, with total healthcare investment volumes approaching £10 billion so far this year and a further £2 billion anticipated before year-end. This is nearly triple the 2024 figure and significantly above the five-year average. Much of this momentum is being fuelled by major US real estate investment trusts (REITs) such as Welltower and Omega, who are drawn to the sector’s resilience during economic uncertainty. Operationally, operators have shown remarkable resilience, and constraints on new developments have exacerbated the supply demand imbalance which in turn strengthens the position of existing stock.
Anthony:
In contrast, the retirement living market is still maturing and has faced a slower year, largely due to a sluggish residential property market and ongoing economic headwinds. However, there have been significant moves, such as the merger between Audley and Elysian, which will create a platform of 26 operational villages. This year has been more about laying the groundwork for future growth, with expectations of increased activity in 2026.
Q2: How are investors approaching these sectors, and what trends are emerging?
Verity:
Investor sentiment remains positive , especially among international players. North American capital has played a major role in recent UK deals, with Welltower acquiring several leading operators and Care Trust REIT making a notable entry into the market with their acquisition of Care REIT plc (formerly Impact). Omega along with Foundation Partners and Deer Capital are also doubling down on the sector.
US REITs are increasingly adopting more flexible ownership models, enabled by RIDEA legislation, which allows them to acquire wholcos and be more hands-on with operations. The rise of management contract structures—long established in the hotel sector – has enabled investors to boost returns by being more directly involved in driving efficiencies through consolidation and integration of tech initiatives.
Investors are showing interest across the full spectrum of the market, from premium assets to more secondary stock, but we have witnessed a growing appetite for mid-market opportunities that offer potential for refurbishment and repositioning. An example of this and a key highlight for the JLL team was acting for Fraklin Templeton on the acquisition of the LDC portfolio, a portfolio of 32 care homes which were formally leased to Four Seasons before they were transitioned to six alternative regional operators.
Demographic fundamentals continue to underpin the investment case: the number of people aged over 85 is set to rise sharply by 2050 as the baby boomer generation reaches 80 years of age, ensuring ongoing demand for care services. At the same time, viability challenges and limited new development has created a supply-demand imbalance, which benefits existing operators. ESG (Environmental, Social, and Governance) considerations are also increasingly important, with investors attracted by the sector’s strong social impact credentials and opportunities for sustainable refurbishment.
Anthony:
Investors remain positive about the retirement living sector but there has been limited investment activity this year. There are a number of large processes ongoing/ under offer which highlight the strength of demand in the sector- two of these are being undertaken by JLL – one is the largest retirement rental portfolio in the UK and the other a mixed tenure portfolio where bidders are looking to pivot it to a rental model. These transactions will be the start of many more to come over the next few years and shows that investors continue to focus on long term income and remain keen to back the right opportunities.
Q3: What’s needed for Integrated Retirement Communities (IRCs) to achieve scale, and is the business model fit for purpose?
Anthony:
The retirement living sector is moving towards two dominant models:
- Compact, urban schemes focused on rental tenures
- Larger, lower-density villages in rural settings, typically for sale with deferred management fees
Achieving scale will likely depend on further consolidation. At present, McCarthy Stone is the only major player with significant operational scale, while others remain relatively small. The recent Audley-Elysian merger is a sign of things to come, and more mergers and acquisitions are expected as the sector matures. This consolidation will give both investors and operators greater confidence, as it creates clearer exit routes and opportunities for growth.
Q4: What lessons can IRCs take from the care home sector’s success?
Anthony:
Three key takeaways stand out:
- Needs-Driven Approach: Care homes have thrived by focusing on essential needs, providing services for those who require support the most. IRCs should move beyond being seen as a lifestyle choice and instead address the needs of older people who aren’t ready for a care home but can’t manage alone.
- Stable Income Streams: The sector should prioritise predictable income, such as rental payments, rather than relying on the ups and downs of the property market. This approach is more attractive to investors and aligns IRCs with other residential sectors.
- Mid-Market Focus: Care homes have succeeded by catering to the mid-market. Retirement living providers who can make mid-market schemes viable have seen strong uptake, both in sales and lettings.
Q5: What’s the outlook for rental-based retirement living?
Anthony:
The future looks bright for rental models in retirement living, which are expected to become a major part of the sector. Some of the most successful portfolios are already rental-based, meeting the growing demand from older people who value flexibility and a stepping stone between their own home and a care home. Rental models offer investors quicker returns and more certainty, while residents benefit from greater flexibility. Leading operators like Moda and Birchgrove are pioneering these approaches, and rental is seen as a promising way to address the mid-market opportunity.
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Want to hear more from Antony and Verity? Both are key speakers at our conference on the 4th of December. Don’t have your place confirmed? There are still some spaces available so if you’d like to reserve your place just head along to: https://www.carehomesconference.com/
Over the past 10 years Built to Rent has shifted from a relatively unknown, often misunderstood concept to an integral asset class with a growing understanding of the vital role it can play in housing delivery in the UK. As the sector faces continued challenges in viability combined with an increasingly difficult regulatory landscape what can we learn from the sectors evolution to date and how will it continue to evolve in the future?
The end of the Amenity Space Race?
From its outset a key differentiator for the sector has been the provision of high quality, shared amenity space. With the age-old question being how much amenity should we provide? In the absence of a ‘magic number’ this led to an increasing drive the accommodate as much amenity as practically possible. These spaces often manifested in response to the latest trends through specific uses with their own specific spatial requirements. As trends shift and people’s requirements change this has led to underutilised spaces that are difficult to adapt to meet changing needs.
This has seen a shift to a more practical approach to amenity provision where flexibility and adaptability is key. Well designed, flexible spaces can work much harder spatially whilst being adaptable to the changing needs of residents. This is coupled with a shift from the faddy to the practical through spaces that prioritise the functional and convenient. From an increased demand for shared workspace to places for people to host guests away from their apartments without the need for the mandatory tidy up or hassle of the post dinner clean up.
Community not amenity
If amenity space in the attractor, community is almost certainly the retainer of residents. A clear USP of Build to Rent is the ability to foster social connection, belonging and engagement with fellow residents. Whilst the spaces we create have an impact in how they facilitate this its success often comes down to the ongoing curation and management of the living experience. In this context we are also seeing a clear shift from relatively inward-looking Build to Rent developments to schemes that embrace wider context and its community. This can extend to providing amenity spaces that can be used by both the buildings residents and wider community to maximise social interaction and even provide additional revenue.
Evolution to building typologies has also seen a move away from doughnut blocks and sticks on plinths to multi building Build to Rent propositions that place an emphasis on the places and spaces that can be inhabited between buildings. Combining this with a range of different uses starts to provide 24-hour activation and more opportunities for social interaction within thriving mixed use communities people will want to call home.
Social sustainability through mixed tenure development
Is there an opportunity to build on the benefits of providing a range of uses by integrating different living typologies in a more meaningful way? In a world where Build to Rent developments are often inhabited by a range of different demographics could this be expanded further? Is there a model that looks to combine different rental typologies into one place to provide additional social sustainability through the integration of people of different demographics and generations. This could combine Build to Rent, Co-Living, Student Accommodation and Later Living into one holistic proposition. Whilst this could manifest in many different ways however the shared requirements across tenures could lead to greater efficiency in operation, potential for greater flexibility in delivery and security when bringing product to market.
Broadening the typological horizon
Typically, Multi Family Build to Rent developments consist of a range of one, two and three-bedroom homes often targeted towards a younger demographic. In practice we are seeing multiple examples where there is much more variation in the demographic of residents being drawn to the Build to Rent experience. With increased numbers of families or older residents with more disposable income there are examples where the smaller proportion of larger homes are the ones that are in increased demand. But rather than simply increase the number of three beds can we go further in how we expand the range of typologies that a Build to Rent community can offer? This could include townhouses, maisonettes, garden flats or larger penthouse units. The introduction of different types of homes presents the opportunity to provide variety for a range of residents whilst offering a point of difference within an increasingly saturated market of homes where the product is extremely similar.
Making an Apartment a Home
Would an increased ability for residents to personalise their homes and their living experience lead to more people staying and growing within a Built to Rent development? The notion of being able to move through a development as needs change has been around for some time. A single person in a studio moving to a one bed with their partner before moving to a larger home when they start to have a family. But could the ability for a resident’s environment to change with their personal needs and lifestyle occur on a more granular level? Could a shift away from a one size fits all approach to rental living provide greater ability for residents to personalise their space on a more regular basis and allow it to feel like their own home? This could include selecting furniture packs, different interior themes or even modular layouts and adaptable furniture that could be reconfigured over time.
In this exclusive interview, senior planning partner at multinational law firm Pinsent Masons, Iain Gilbey, shares his insights into the evolving landscape of UK planning policy, the government’s multi-layered approach to reform, and what it all means for residential development. From legislative shifts to the practical realities on the ground, this Q&A explores the opportunities and challenges ahead.
Q: How is the government changing the planning system?
A: The current government, just over a year into its term, has adopted a multi-layered strategy to reform the planning system. Central to this is the belief that planning reform is a key lever for economic growth. Housing and infrastructure development are seen not only as ends in themselves but as catalysts for broader economic stimulus.
The flagship initiative is the Planning and Infrastructure Bill, which is still making its way through Parliament. Relevant to residential development, this bill proposes several significant changes, including:
- Allowing local authorities to set their own planning fees to better fund services.
- Mandating compulsory training for elected members on planning committees.
- Delegating more decisions to planning officers to streamline processes.
- Introducing spatial development strategies to support regional planning.
- Enabling further devolution through regional development authorities.
These legislative changes aim to empower development and improve delivery, but they will take time to implement and filter down to local decision-making.
Q: What impact will this legislation have, and when will we see results?
A: Legislative reform is, by nature, a gradual process.. Even once the Planning and Infrastructure Bill becomes law, its practical impact may not be felt for another year or two. The more immediate and pressing challenge lies in the capacity of local planning authorities, many of which are under-resourced and facing difficulties in retaining skilled staff. Without adequate personnel, even the most ambitious reforms risk faltering at the point of delivery.
However, not all change moves slowly. Recent amendments to the National Planning Policy Framework (NPPF)—particularly the introduction of the “Grey Belt” concept—are already driving tangible outcomes. These policy shifts have enabled housing developments and economic development, including data centres to gain approval in areas previously considered unsuitable, demonstrating that targeted adjustments can unlock immediate opportunities.
Q: How is the industry responding to these changes?
A: The industry has broadly welcomed the reforms, recognising their potential to unlock new opportunities for development. While there’s a pragmatic awareness that local authorities may face challenges in aligning with central directives—often due to local circumstances or limited resources—there remains optimism about the direction of travel.
At the same time, developers are increasingly viewing appeals and Secretary of State interventions as effective routes to securing approvals. Angela Rayner’s recent intervention in the Quinn Estates applications in Sittingbourne, Kent, is a notable example. Despite local opposition, the government’s involvement underscored its commitment to delivery. This evolving dynamic suggests that, for some developers, appeals may offer greater speed and certainty in navigating the planning system.
Q: What opportunities do the Grey Belt, Greenbelt, and new towns policies offer?
A: The Grey Belt policy has been particularly impactful. It has opened up areas in the South East of England see by way of example a recent run of successful appeals in St Albans—long resistant to large scale residential development—to new housing schemes. These decisions, some challenged in the High Court, have largely survived the appeal process, indicating strong support for the new policy direction.
In contrast, green-belt sites that don’t qualify as “grey belt” still require developers to demonstrate “very special circumstances” to gain approval. However, if a site can be reclassified as Grey Belt, it benefits from a more favourable planning environment.
As for new towns, the New Towns Task Force is expected to publish its final report in September. While this will identify potential sites for large-scale development, it won’t directly influence planning decisions in the short to medium term. The government has acknowledged that these new towns won’t contribute to its target of 1.5 million homes during this Parliament, underscoring the long-term nature of this initiative.
Q: Are there other significant changes we should be aware of?
A: Yes, one of the more technical but important shifts is the move towards a rules-based planning system. Currently, planning decision making is highly discretionary, with decisions often hinging on subjective interpretations of policy. The government is exploring mechanisms like National Development Management Policy and design codes to reduce this subjectivity. If a proposal complies with these rules, it could be approved more swiftly, offering greater certainty for developers.
One area attracting increased attention is the implementation of the Building Safety Act, particularly in London. In the wake of Grenfell, tall buildings are now subject to more rigorous safety standards, reflecting a necessary shift toward enhanced accountability. The Health and Safety Executive, which oversees this regime, is working to scale its capacity to meet demand—though the volume and complexity of applications have created some very significant delays. For many developers, navigating this process has become a central focus, often taking precedence over planning or viability considerations.
Q: What’s the overall outlook for residential development?
A: We’re undoubtedly in a more pro-development policy environment than before. The government’s messaging and reforms reflect a strong commitment to delivery. However, the gap between policy and practice remains wide. Local authorities’ capacity issues, coupled with procedural delays, mean that change is incremental.
Still, the industry is adapting. Appeals are becoming an often preferred route, and developers are learning to navigate the new rules. Over time, these reforms—especially the shift towards a rules-based system—could reshape the planning landscape in meaningful ways.
Summary
The planning system is undergoing significant transformation, driven by a government keen to stimulate growth through development. While legislative changes will take time, policy adjustments like the Grey Belt reclassification are already making waves. The industry is responding with cautious optimism, balancing enthusiasm for reform with the realities of local implementation.
As Iain aptly puts it, “We’re now operating in a far more pro-development policy environment than we were previously.” The challenge now is turning that policy into delivery.
Ahead of our UK Living Conference in September we sat down with Simon Scott, Lead Director Living Capital Markets at JLL, to get his insights on the current state of the UK living sectors—from investment trends to sectoral growth and the challenges shaping the market.
What’s happening in the UK living sectors right now?
The most active area at the moment is probably single-family housing. You can’t talk about the living sector without mentioning viability—particularly cost inflation, outward yield movement, and the impact of the Building Safety Act. These have made dense, apartment-led schemes more difficult to deliver, which is why single-family housing is gaining traction.
This shift is largely due to the fact that single-family housing avoids many of the regulatory and structural hurdles that come with multifamily developments. While cost inflation still affects all sectors, the absence of high-density compliance issues makes single-family homes more attractive to developers and investors alike. It’s a space where we’re seeing a lot of momentum and innovation.
Where is investment money currently focused?
Due to viability challenges, investors are turning to existing first- and second-generation housing stock—mainly multifamily, with some early interest in single-family and retrofit . Student housing remains active due to its running return, and later living and healthcare have bounced back post-COVID. Co-living is still emerging but offers density benefits that can help with development viability.
Investors have become increasingly cautious, and the ability to underwrite deals with more predictable outcomes is key. Co-living and student housing, in particular, offer higher density and operational efficiencies, which can help offset some of the broader market challenges.
What are the biggest issues facing the living sectors, and have they stalled activity?
Demand isn’t the issue—occupancy levels are high. The real challenge is the relative cost of funds. If you can earn 4% in the bank, you need a higher level of return to justify the risk. There’s also a disconnect between government expectations and the private sector’s risk-reward balance. Education around what drives investment is crucial. Developer and contractor insolvencies have added to the risk profile, making existing opportunities more appealing than new developments. But that doesn’t help solve the housing crisis—we need mechanisms to attract institutional capital into the sector.
There’s also a need for better communication between the public and private sectors. Initiatives like the Build to Rent Alliance (formerly the Build to Rent Task Force) aim to bridge this gap, but more work is needed. Without a clear understanding of the risks and returns involved, it’s difficult to create policies that genuinely support development. The sector needs a more collaborative approach to unlock its full potential.
Which sectors are set to grow in the short, medium, and long term?
Short to Medium Term:
- Single-family housing: Still lots of room to grow at scale.
- Co-living: Evolving and increasingly relevant as a small, affordable housing asset class, though local authorities are still catching up.
Medium to Long Term:
- Later living and healthcare: Driven by demographic trends—an ageing population and lack of bespoke housing products make this a strong bet.
- Student accommodation: Ironically, the youngest demographic is the most mature investment class. It remains a strong, institutionally backed asset.
These trends reflect broader shifts in how people live and what they need from housing. Co-living, for example, is adapting to changing lifestyles and affordability pressures, while later living and healthcare are responding to demographic inevitabilities. Investors are increasingly looking for thematic opportunities, and these sectors align well with long-term societal changes.
What is the next iteration of PBSA?
The residential real estate sector is vast, encompassing a variety of sub-sectors that respond to different demographics, investment strategies, geographical nuances, affordability, and lifestyle preferences. Over time, industry professionals have developed specific terminology to distinguish these sub-sectors, with acronyms such as BtR (Build to Rent), SFH (Single Family Housing), and PBSA (Purpose-Built Student Accommodation) becoming commonplace. But as our society and housing needs evolve, are these names helpful or necessary? Do they provide clarity or constraints?
Residential Sub-Sectors at a glance
Some of the most widely used terms in residential development include.
- Purpose Built Student Accommodation (PBSA) – private/institutionally owned and managed student living, generally with amenity facilities.
- Co-Living – a blend of PBSA and Built to Rent, providing a lifestyle choice with compact apartments and community led amenities with flexible rental options. These are institutionally owned and managed and is a contemporary alternative to PRS shared housing.
- Build to Rent – Institutionally owned and managed rental apartments – also called ‘Multifamily’ in America.
- Single Family Housing – Suburban institutionally owned and managed rental homes. This is challenging the traditional house-builders ‘For Sale’ models.
- Private Rented Sector (privately owned and rented urban or suburban homes)
- Senior or Later Living or Retirement Living – There are many forms of typologies and services for older people which range from community and lifestyle focussed rental to serving the care needs for dependants.
Why Do These Distinctions Matter?
Understanding the various residential sub-sectors helps investors, developers, and policymakers make informed decisions. Each typology has unique market dynamics, risk profiles, and resident expectations. As the housing landscape evolves, clear and consistent terminology can support more effective decision making, improve investment strategies, and ultimately ensure housing solutions that genuinely meet the needs of diverse communities.
Whether you’re an investor exploring new opportunities or simply interested in how housing trends are shifting, recognising these sub-sectors is key to understanding the modern residential market.
Whilst these references appear to matter from a Real Estate investment, Policy and Planning perspective, from a resident’s point of view the picture is less clear. Terms like BtR or PBSA are rarely understood outside industry circles. In the UK, where home ownership remains deeply rooted, rental models are not widely understood, even as preferences shift towards more flexible, community focussed living options.
How could things evolve?
In reality, many of these typologies are beginning to overlap. For BtR for instance now attracts students, professionals, families and retirees.
In response to this terms such as ‘Flex-Living’ and ‘Blended Living’ are emerging. These seem to challenge the notion that people of certain demographics all need to live together and embrace intergenerational, multi need communities built around adaptability and inclusion.
The other important point of distinction here is that residents could change their home preferences within a rental community/neighbourhood they feel part of in a long-term context.
A strong example of this is Birchgrove and Hybr’s 2024 intergenerational living scheme in North London which sees Retirement Homes and Student Living side-by-side.
Research also supports this model; A 2019 UCL study found that increased social contact improves well-being and reduces dementia risk in the elderly. Intergenerational Living boosts older people’s sense of purpose and life expectancy. Conversely younger people also benefit, gaining empathy, wisdom, tolerance, and understanding by connecting with older generations, fostering stronger relationships and mutual growth. Based on this, could more dynamic housing models positively impact some of our bigger society and welfare challenges?
Flexible Housing for Evolving Lives
Could housing evolve with its residents? This concept involves a dynamic development arrangement that adapts to an its residents evolving needs over time. Initially, a student might occupy a bedroom or apartment designed for their specific requirements and budget. As their lifestyle changes, they could transition into a next stage Co-living offer, then progress to a larger shared apartment. They could then transition into a family-oriented home and, later, to a residence more suited to the needs of older adults—offering flexible space options.
How would this model manifest within a building, or arrangement of buildings? Does everyone have a separate entrance? Are the homes stacked vertically or horizontally across the building? Importantly, how would this model work from an investment perspective? Could it be a more effective and optimised investment model?
What’s Next?
As housing needs continue to evolve, it may be time to reassess how we define and distinguish residential sectors. The tension between what residents really want and need, and how that’s labelled and marketed, vs what works from an investment and policy perspective will ultimately determine how ambitious and creative we can be. Personally, I feel societal needs are continually evolving and maybe we need to break some of the silo’s which have been formed to test the provision of resilient and responsive homes for all.
I think the notion of UK PBSA being a defined and distinct typology, as it has been for the last twenty-five years in the UK, could and should be challenged if the sector is to continue to evolve and ensure long-term sustainability.
Nick Riley is Managing Executive Director at Whittam Cox Architects, who are corporate supporters of LD Events. Hear more from Nick on 13th May at the Student Housing 2025 Conference in London. To book tickets please visit www.studenthousingevent.com
Ahead of the 18th Annual London & South East Resi Conference in March, we sat down with Katy Warrick, Head of London Residential Research at Savills, who has spoken at this conference for more than a decade. As a foremost expert in the London Resi Market, we asked Katy for her thoughts:
Q: What are the current challenges and opportunities in the London and SE residential market?
A: The London residential market faces significant challenges, particularly in terms of housing delivery. The delivery of private and affordable housing has been falling, with the number of new homes starting construction down by about 60%. Planning permissions are also falling by a similar amount, and while applications have started to tick up slightly, the overall pipeline is significantly lower than needed. Currently, nearly 36,000 homes are being built each year, but the Government’s Standard Method for calculating housing need suggests that 88,000 homes are needed each year in London. This massive gap highlights the desperate need for more housing.
Developers are facing several challenges in the market. The cost of debt is a major issue, affecting both development finance and purchasers, who may be financially constrained due to higher debt costs. Planning uncertainties and the time required for planning approvals are also significant hurdles. Build costs have risen significantly over the past couple of years, impacting the viability of schemes. This affects London more significantly than other regions, because flats are more expensive to build than houses, with high-rise being the most expensive. 95% of homes built in London are flats, compared to just 5% in the Midlands and North of England. Additionally, some contractors have gone bust, causing delays and increased costs for developers who need to replace them. Supply chain disruptions and new regulations around fire safety and building safety are further complicating the situation.
Despite these challenges, there are opportunities in the market. Interest rates are coming down, which could boost demand and improve development finances. The industry needs to come together to find solutions to the various challenges it faces. Collaboration and innovation partnerships are crucial to navigating these issues and ensuring the successful delivery of housing projects.
Q: How has the industry responded to the new Government and how can they incentivise development?
A: The industry has responded positively to higher housing targets and the introduction of the grey belt concept, which is particularly interesting for London. However, the challenges remain significant, with schemes often not viable in their current form. More money pledged for planning departments and for training planners is a positive step. The industry is also looking for assistance for first-time buyers, as the upcoming increase in stamp duty is not helpful.
Q: Where do innovation partnerships and JVs now fit in?
A: Innovation partnerships and joint ventures (JVs) are more crucial than ever. We are seeing a significant increase in partnerships, even among traditional developers who previously operated independently. These partnerships help share risks and bring together different skills, money, and land to get things done. Examples include the MADE Partnership between Homes England, Barratt, and Lloyd’s, and the new homes accelerator task force driven by MHCLG both targeting to unlock large scale sites. These initiatives are positive steps towards addressing the delivery issues in the market.
Q: What is the role of rental living in an evolved residential development market?
A: Build-to-rent (BTR) is an established tenure and an important part of any large scheme in London. Offering more choices and developing the sector in a well-managed way is crucial. However, BTR faces the same challenges as other developments and as a result we’ve seen limited forward funding deals done in the past year. But investor appetite remains strong, evidenced by investment into operational assets and we expect forward funding activity to grow as interest rates fall further.
Beyond BTR, we are also seeing continued growth of the co-living sector in London, with almost 6,000 homes operational and a further 15,000 in the pipeline. It offers a more flexible and community focused product that compliments existing rental options, increasing housing choice and importantly adding another route to deliver new homes.
Q: What can we expect from the conference this year?
A: The conference will feature policymakers on various panels, providing insights on how they plan to solve London’s problems. Lisa Fairmaner from the GLA, who oversees the New London plan, will be a key speaker. It will be interesting to hear her updates.
As always, the conference will also offer great networking opportunities for attendees and provide opportunity to find JV partners and connect with funders and developers willing to take an imaginative, collaborative approach to solving the housing challenges in London.
To hear more from Katy, as well as leading developers, local authorities, the Government’s Chief Planner, and Homes England, along with leading sector advisors, sign up to London Resi 2025, which takes place on 4th March. To learn more please visit www.londonresidevelopment.com
Ahead of the Affordable Housing Conference in March, we sat down with Helen Collins, who has expertly chaired the event annually since 2019, and returns to the chair for a 7th time on 5th March this year.
Helen is a Principal of Avison Young, heading up the Affordable Housing team and the Birmingham Office.
How have we seen delivery and investment models for affordable housing evolve over the last decade?
Well, let’s go back a bit further. We can break delivery down into three chunk. Until the late 1970s, local authorities led delivery of affordable homes – social rent – funded through government grant. In the late 1980s, legislation changed, allowing housing associations to take on private finance to reduce the level of grant needed per new home. This change saw housing associations lead delivery for the last 30 years. However, with c.£120bn debt on the HA sector balance sheet and cost pressures from stock investment and safety needs on legacy stock, capacity for development is muted. We are now at a cross roads – for-profit registered providers came onto the scene 6/7 years ago bringing fresh capital into the affordable housing market. We need more For Profits to come in and operate at scale. We need Housing Associations to continue to develop – they have decades of expertise and some are looking to ‘go again’ setting up partnerships and their own FPRP vehicles. Local authority estate regeneration and housing supply is important and we need to find ways to unlock this. To get anywhere near 1.5m homes we need a mixed economy, with local authorities, housing associations, for-profit providers, Combined Authorities, developers and investors all playing vital roles.
Why is there so much interest from funds and investors in affordable housing?
Strong demand fundamentals combined with stable and predictable rental streams, plus the obvious societal benefits of providing affordable homes, and sector regulation make the sector an attractive investment option. There is room for value add funds during the development phase, and once built and let the stable long term income profile makes it an attractive investment for pension and insurance Core / long income funds looking for alternatives to gilts. Although the returns are not high, they are generally steady and safe over the long term. Local government pension schemes, UK DB/DC and insurance and overseas funds are all needed to support an increase in supply.
What is the attraction of setting up a for-profit registered provider?
Having an FPRP is a legal requirement of owning regulated social housing. More importantly having an FPRP vehicle and directly owning and operating stock opens up the widest range of routes to market to build portfolios at scale for operating efficiency: direct land acquisition and development, buying completed homes in bulk from developers converting market sale homes to affordable with grant; partnering with Housing Associations to acquire existing stock / development pipeline. Many of the more established funds have multiple FPRP entities to hold different types of stock, and attract different pools of capital – such as shared ownership or rented products. This allows them to manage their investments more effectively.
How are sector partnerships contributing to the delivery of much-needed housing?
Partnerships have always been crucial to delivery. Public-private partnerships have been instrumental in regenerating estates and areas. Local Authority/HA/developer partnership models are well established. For-profit providers are now partnering with volume house builders and housing associations to buy up stock at scale. We’re also seeing new strategic partnerships, such as the joint venture between Legal & General and the Greater Manchester Combined Authority to build 1,000 homes. Looking ahead we see significant potential for regionally based partnerships linked to the devolution agenda and mayoral targets for housing supply. Transport and infrastructure partnerships for housing supply also offer significant future potential.
How can we achieve the government’s target of 1.5 million homes in the next five years, and what is the role of affordable housing?
It’s a tough target, but setting high goals is essential – as is maintaining a high degree of energy and ambition backed up by action. Changes in planning policies, such as the presumption in favour of development and harmonising need calculations, will help. It’s important to not disrupt what currently works well – relationships between Homes England, Local Authorities and Combined Authorities need to effective. Affordable housing can play a massive part in new supply – a strong grant settlement is crucial – as is flexibility to combine gap funding in high cost/low value areas. Housing associations and for-profit providers must see a stable rental income to take on more debt and raise funds.
What can we expect from the conference this year?
The conference has an incredible line up and will offer deep insight into the FPRP / affordable market in context of the wider living sector: government thinking and future opportunities for supply ; market and policy updates and I’m particularly looking forward to the fireside chat with experienced professionals who have decades of experience in the affordable housing landscape.
To hear more from Helen, and the conference panel of market leaders, please join us for the 19th Annual Affordable Housing Conference in London on 5th March. To learn more about the conference and to book your tickets please visit www.affordablehousingevent.com
Ahead of the Care and Retirement Living Conference this month we caught up with property expert and long-time friend of LD Events, Anthony Oldfield. Anthony gave his thoughts on where the markets at and where it’s going at this interesting time….
Q: What is happening in the current Retirement Living property market?
A: We’ve seen quite an uptick in the number of new schemes being delivered as the market has recovered from the 2022 mini-budget, which had significantly curtailed development and investment. There was a real pause, but since then, things have recovered well. A lot more units are being delivered, which is great. However, the Mayhew review, a significant government report from last year, recommended an annual delivery of 50,000 new units to meet housing demand. Currently, we’re only delivering 10,000 per annum, falling well short of that target. This means the demand-supply imbalance is going to be further exacerbated due to population growth and change. The market is heavily development-led, focusing on new opportunities, sites, and units being delivered. There is a strong planning pipeline, and the new government has emphasised house building as a key pillar of their agenda. While there is quite a bit of activity on the development side, more is needed to meet the targets.
Q: What are the investors doing? Are we seeing interest from new investors?
A: There is real interest from new investors, and we are working with them regularly. They understand the demographic story and recognise the sector’s strong ESG credentials. Retirement living is considered the most untapped of the living sectors, which include student housing, build-to-rent, and retirement living. Investors have seen the growth and success of student housing, BTR and single-family housing from a rental perspective. There is a general consensus that retirement living has significant latent potential and is poised to be the next market to take off. Many investors are aware of this potential, but often lack opportunities to invest. We are working to unlock and find these opportunities.
Q: What is the likely impact of the new government on the sector?
A: The new government will definitely impact the sector. There is a lot of legislation that was in progress under the previous government. With the election called earlier than anticipated, it remains to be seen how much of this legislation the new government will pick up and take through the legislative process. For instance, the Freehold and Leasehold Reform Act 2024, which came through on the last day of Parliament, is considered very important for the sector. It defines event fees in legislation for the first time, which is significant for the sector. However, it did not include a cap on ground rents, and the sale of leasehold houses has been banned with an exemption for retirement housing. There is still further work needed, and secondary legislation will be required to implement these changes. The new government’s focus on house building will benefit the Retirement Living market, presenting more opportunities for development, especially around the grey belt, which is suitable for larger integrated retirement communities.
Q: Where are the big growth opportunities in retirement living in the next few years?
A: The biggest opportunity lies in the retirement-for-rent market. Historically, much of the stock delivered has been on a for-sale model. However, in the last ten years, there has been a 200% increase in retirement living schemes offering market rent tenure and nearly a 400% increase in market rental units. This trend is expected to accelerate further in the coming years. Many operator clients report high demand from older people wanting to rent. Current operators are not necessarily set up for this, but changes are coming from the bottom up. The rental model offers flexibility, allowing older people to move quickly if needed and providing a greater level of support without moving into a care home. This trend is expected to grow, with more companies likely to offer 100% rental schemes designed specifically for this market.
Q: Is retirement for rent attracting interest from BTR investors? What is the potential?
A: BTR investors might need to think differently initially. There are many pepper-potted retirement rental portfolios performing well, but they differ from standard BTR, where there is 100% control over the whole block. These portfolios have established substantial and latent demand for older people to rent, which is positive. There is a wide price range with high occupancy rates, presenting good opportunities for consolidation and growth in the rental proportion. We expect to see more investment from BTR investors and new investors in this sector in 2025 and beyond.
Join Anthony and a panel of industry leaders, plus hundreds of delegates from the sector, at the 15th Annual Retirement Living and Care conference in London on 20th November. To learn more about the event please visit www.carehomesconference.com
Ahead of the Build to Rent UK Conference on 27th November, we caught up with Richard Donnell, Executive Director of Zoopla, to discuss what the new Government and the current economy means for Build to Rent and Housing
Q: What does the new Government mean for Housing Delivery and where does Build to Rent fit?
It is positive that the Government is committed to building more homes and is starting with reforms to the planning system, more funding and more planners. This should be seen as just the start as there is much more to do to support housing delivery across all tenures.
I am less sure how much the Government and senior policy makers appreciate the fact that the cross-subsidy model of development is struggling to support delivery. Viability is a big barrier to growing supply and more targeted funding and support is needed.
Building more homes and sustaining higher output needs steady and predictable sources of demand. Corporate investors buying homes to rent out is a key source of demand for homes in future as well as housing providers buying affordable homes and private home buyers.
Q: How has the private rented sector changed in recent years, and what factors have driven this?
The private rented sector (PRS) in the UK doubled in size from 2000 to 2016, driven by private landlords buying homes to rent. Growth has stagnated since then with PRS stock levels static at c.5.5 million homes. Several factors contributed to this slowdown. Changes in tax policy, specifically those targeting buy-to-let landlords, and uncertainties like Brexit, followed by higher borrowing costs have all played a role.
During the pandemic, there was a notable drop in demand for rental properties, particularly in urban centres. However, as the economy reopened, demand surged, especially with the return of international students and workers. Despite the recent influx of renters, the stock of available rental properties has not increased, creating intense competition for housing and significant rental price increases averaging 30% over the last 3 years.
Q: How have higher mortgage and interest rates affected residential property investment?
Higher mortgage and interest rates have undoubtedly increased the risk and complexity for investors in residential property. These rate hikes have a direct impact on the return profile of BTR projects, making investment decisions more complicated. For developers, this means navigating a tougher landscape where the margins might shrink, and affordability becomes an issue, especially for first-time homebuyers who may now be priced out of home ownership.
On the flip side, this creates a stronger rental market as more individuals are compelled to rent, increasing demand for BTR properties. However, this also increases the need for developers to carefully evaluate the balance between private sales and rental housing to ensure project viability.
Q: What is the outlook for rent growth in the BTR sector?
Recent years have seen unprecedented rent growth, particularly in major cities like London. Between 2021 and 2023, rental prices surged by 30-35% in some areas. However, looking forward, many experts, including those in the BTR market, are urging caution. While the pandemic-induced surge may have bolstered rental yields for now, there are concerns that renters’ ability to continue absorbing rent increases is limited, particularly in London and other high-cost cities.
As a result, BTR investors and developers are advised to take a conservative approach, assuming rental growth will more likely track wage increases, which hover around 2.5-3% annually. The rapid upward reset in rents should be seen as a one off and long-term sustainability should be the core assumption for BTR investors.
Q: How does the BTR sector contribute to housing diversity and affordability?
While the BTR sector offers high-quality rental housing, it doesn’t necessarily address the need for affordable or social housing. BTR developments are often built in prime urban locations, offering amenities that command higher rents. This makes them attractive to young professionals and middle-income earners but less so for lower-income households. That said, affordable housing requirements ensure that new delivery includes a range of rented tenures.
However, the BTR sector still plays an important role in the housing ecosystem by providing alternatives to home ownership. It helps professionalize the rental market, often raising standards and offering better-maintained properties with longer tenancies. For the sector to contribute meaningfully to housing affordability, it needs to operate alongside social and affordable housing developments, ensuring a broad range of rental options are available.
Q: What impact could the Renters’ Reform Bill and potential rent controls have on BTR?
The Renters’ Rights Bill currently progressing through Parliament introduces new regulations aimed at improving tenant rights, but it stops short of introducing rent controls, a policy that has caused concern in the investor community, particularly in Scotland. Rent control measures there have weakened investment and increased uncertainty as landlords have potential lost ability for rents to track the market over time. It seems likely that Scottish Government will reverse some of the proposals making Scotland more attractive to investors.
In contrast, England has avoided rental controls, which has kept investors relatively confident about the future of the BTR market. However, the Renters Rights Bill does push for higher standards across the rental market, focusing on improving conditions in substandard properties. This move toward regulation should benefit the BTR sector, which typically offers higher quality, professionally managed homes, thus positioning it as a key player in raising rental standards overall.
Q: How should BTR investors approach the market in the current climate?
BTR investors need to be both realistic and strategic. The recent surge in rents has been driven by a unique set of circumstances, including post-pandemic demand spikes, but this level of growth is unlikely to be sustainable in the long term. Investors should align their rental growth expectations with wage growth and consider diversifying their portfolios to different segments of the rental market. This includes exploring emerging opportunities like single-family rentals or entering secondary markets where there may be less saturation and more room for growth.
Additionally, investors must remain aware of regional market differences. What works in London may not be viable in Leeds or Liverpool, so understanding local demand and the regulatory landscape is crucial for success.
Nick spent over a decade in leadership roles at housing innovator Pocket Living growing the business to a turnover of £70 million and delivering more than 2,000 homes across large and small mixed use sites. He remains a strategic advisor to Pocket Living.
He also formerly served as a Cabinet Member in LB Wandsworth where he led on planning helping to enable the initial stages of the Nine Elms regeneration and Battersea Powerstation redevelopment. He is a chartered planner, land surveyor and former Non-Executive in the London NHS.
At Urban Sketch, Nick leads the team and provides strategic advice across all projects. He is passionate about good placemaking, development and the potential of public private partnerships.
Where is the co-living market right now?
The co-living market is still in its nascent stages, with relatively few operational buildings. However, it’s undergoing rapid growth, fuelled by substantial interest from capital markets. This growth is partly driven by the reduction in rental stock, particularly in Houses in Multiple Occupation (HMOs). As the number of HMOs decreases, co-living has the potential to fill the gap for young people seeking housing options. It’s an exciting opportunity that is yet to be fully realised, which is why events like this conference are so important.
Who is the target market for co-living?
The target market primarily consists of individuals who have transitioned out of the student housing market. These are people likely in their mid-to-late 20s up to their early 40s. Typically, they are singles or couples living in cities with good connectivity, earning reasonable but not high salaries. Currently, many co-living spaces, especially in London, cater to higher income brackets due to limited supply, which has driven rental prices up. However, the market hasn’t yet fully solved how to cater to mid-income earners, though I anticipate innovations in this area soon.
What are the drivers behind this new living asset?
A significant generational shift away from home ownership is one of the key drivers. While my career began in affordable home ownership, the challenges in that sector have become apparent. People today are less inclined to own homes, partly due to affordability issues and partly due to changing cultural views. Flexibility and convenience are also driving factors. People value the ability to move easily without the hassle of managing all the bills and logistics. Co-living meets this need by offering a convenient, flexible living option close to workplaces.
What are co-living’s biggest challenges and threats?
One of the main challenges is that co-living is still not well understood by policymakers. It’s often viewed as a substandard, expensive option, but this perspective overlooks the fact that it’s replacing an outdated model—namely, poorly converted HMOs that push families out of cities. Co-living offers a professionally managed, purpose-built alternative. The biggest hurdle is convincing policymakers that this isn’t a substandard option but rather a necessary evolution in housing to meet the needs of modern generations.
How do the capital markets view co-living right now?
There’s a lot of interest in co-living from capital markets, although core capital, like UK pension funds and insurers, isn’t fully on board yet. It’s likely a matter of waiting to see how the market develops over the next three to five years. I believe co-living should be seen as an extension of the build-to-rent sector, which would make it more palatable to capital markets. Some investors are still cautious about what to do if co-living doesn’t succeed, but with proper appraisal and location selection, the fundamentals suggest it should be a successful investment.
What are the implications for other living uses?
Co-living reflects trends we’ve already seen in the student housing market, where quality and convenience have become paramount. It also indicates that the traditional multi-family housing model is struggling, especially with current debt rates. As a result, we may see fewer multi-family developments and more co-living projects, as people’s preferences and economic realities shift.
What kind of innovations can we expect to see in the future?
There’s potential for senior co-living, which is an area I’m particularly interested in. We haven’t yet figured out how to make senior living work for middle-income earners in the UK, but co-living could provide a solution through smaller, well-amenitised buildings. Additionally, there’s room for innovation in the broader co-living market, particularly in creating a more affordable middle-market offering. This could involve shared apartments with efficient designs that cater to mid-income earners, potentially unlocking a large market of people who currently can’t afford to rent independently.