Retirement Living – the opportunity

1. Retirement Living – the opportunity Henry Lumby – Head of Retirement Living

2. Structural Demographic Shift Huge growth in elderly population as the “Baby Boomers” enter their “Third Age” and become “Last Time Buyers” Currently 15.8 million over 55’s – forecast to increase by 13% to 17.8 million in next 10 years – 78% are owner occupiers The number of people aged over 85 is expected to treble within 20 years In England alone by 2033 there will be a 60% increase in older households Death rates are slowing down with 10% reduction in last ten years – 1 in 5 children born today will live to over 100 – top of the pyramid is widening

3. Under occupation The number of people aged 75 and over living alone will increase by over 40% in the next 20 years 3 million homes are under occupied with 7.7 million spare bedrooms The majority of these under occupied homes are family homes, that are not fit for purpose for both the changes in lifestyle and need – cost to run / adapt / proximity to family and amenities 58% of over 55’s will put off downsizing until after 70 years old, a quarter until 80+

4. Over 55’s housing wealth The Over 50’s account for 80% of the nations wealth By 2026 estimated housing equity for the over 55’s could rise from £1 trillion today to £2.3 trillion Soon we will have more people retired than economically active There are 7.15 million homes owned by the over 55’s – which is over 50% of market 1 in 10 expect to downsize for monetary reasons 1 in 3 expect to use their property to fund their retirement

5. Where are they now? Source: ONS

6. Currently - Want to move but majority don’t move

7. Or they move to the wrong type of property

8. There’s a frustrated desire to move Source; Housing Market Intelligence

9. Current Retirement Living stock Retirement housing in the UK is just 2.4% of housing stock Most built in 1960’s and 1970’s – no longer fit for purpose 60% owned by Housing Associations Current supply focused on the need driven aged 78 plus sheltered housing McCarthy and Stone have 70% share of owner occupier market

10. UK market today 8 million people are interested in down-sizing BUT Only 2% of the over 55’s are moving Limited operators and options – mainly focused on sheltered housing 7,000 homes being built per year, compared to 30,000 per year in 1980’s McCarthy and Stone 70% share of owner occupier market Most retirement stock is currently for affordable rent / shared ownership from housing associations – lack of significant variation of stock or offering Summary – wealthiest sector of population, demographic shift in favour, limited competition and stock, demand outweighing supply, need driven and lifestyle moves – significant opportunity for growth The market is fragmented, and not capable of meeting demand across the age / need / lifestyle groups

11. Private Hospital The current market – fragmented (& confusing) NHS Hospital Private Sector Public Sector Housing Association Nursing & Care Homes Local Authority Nursing & Care Homes Private Care or Nursing Homes High Local Authority / Retirement Housing Extra Care Housing - Rented Extra Care Housing - Shared Ownership Extra Care Housing - Owned Housing Association Retirement Villages Level of Care Required Retirement Housing - Rented Retirement Housing - Shared Ownership Retirement Housing - Owned Low General Housing Domiciliary Care Aspirational Downsizer Market None Net Property Wealth

12. Existing provision Source: ONS, EAC, Housing LIN, ARCO

13. Creating homes that people want...where they want

14. The web of John McCarthy – Sheltered housing

15. Retirement villages – focus on top end

16. Not for profits – big market share & mixed tenures

17. How does UK compare? Source: ONS, EAC, Housing LIN, ARCO

18. USA v UK – perception & desire – different entry points

19. Retirement Living crisis – what has happened? Inclusion in Core Strategies and housing targets Affordable housing and CIL cost mitigation Government support and focus – media and think tank pressure – top of the agenda New entrants and funding into market and investors appetite – increasing level of interest from those wishing to enter the market - fresh capital injection for existing operators, new companies’ set up Widening of the product on offer and target customers – lifestyle as well as traditional need driven developments – increase in supply and diversity of stock Lifetime Homes standards / HAPPI – sustainable, easy to manage, and adaptable Law Commission investigation into Deferred Management Fees (also known as Exit / Event fees)

20. Retirement Living - Current annual supply is only... Source – Savills Research 7,000

21. Annual supply to meet growth in people aged 65+ Source – Savills Research 11,000 7,000

22. Annual supply to meet growth in people aged 75+ Source – Savills Research 18,000 11,000 7,000

23. Additional annual supply to expand toUS/NZ/Australia levels Source – Savills Research 60,000 18,000 11,000 7,000

24. Opportunity for innovation include - Product design, layout, density and location (urban centric and rural, bungalows in the sky) Mixed use – complimentary uses and services Technology and lifestyle / care services Adaptable homes – lifestyle through to need Types of tenure – the new protected tenancy PRS – annuity income – alternative investments Purchase methods and equity release / funding Marketing – customer journey, “Silver Surfer” Government support (stamp duty) and new planning use class and planning policy Public / Private Partnerships

25. Solving the £250k Challenge Source: HM Land Registry 65% 35%

26. In summary Huge interest from private equity and pension funds to invest in sector – Prop Co and Op Co opportunities and annuities Others are looking closely, from developers to house builders to international groups, to funds Opportunity across the price ranges, and tenure types Demographics and wealth within the 55+ age group supports, and limited supply / competition supports investment Frustrated buyers, fragmented offering Now is the time...

27. Thank you