Solving the UK’s housing problem with seniors housing
The lack of seniors housing is a ticking timebomb
For years, the UK’s housing crisis has dominated policy discussions, yet we continue to focus on the wrong end of the housing chain. Increasing housing delivery is one of Labour’s main objectives this parliament, but do they realise that one of the most transformative opportunities lies in addressing the accommodation needs of our rapidly aging population? The UK’s over-65 population will reach 5 million people by 2040, yet we’re only delivery 6,000 seniors housing units annually against a requirement of 50,000.
The lack of seniors housing is a ticking timebomb
For years, the UK’s housing crisis has dominated policy discussions, yet we continue to focus on the wrong end of the housing chain. Increasing housing delivery is one of Labour’s main objectives this parliament, but do they realise that one of the most transformative opportunities lies in addressing the accommodation needs of our rapidly aging population? The UK’s over-65 population will reach 5 million people by 2040, yet we’re only delivery 6,000 seniors housing units annually against a requirement of 50,000.
"This isn’t just a housing problem, it’s a social, health and economic crisis waiting to happen.
The solution requires a fundamental rethink of where we build new homes and, maybe more importantly, for whom."
The £32 billion opportunity
Over-65s consume half of NHS resources, making our aging population one of the most significant fiscal challenges facing the UK. Each resident in purpose-built seniors accommodation generates annual savings of up to £6,500 in local health and social care costs. Multiply this across the 5 million additional seniors expected by 2040, and the potential £32 billion healthcare savings become transformational.
Yet despite this, delivery remains woefully inadequate. Despite strong investor appetite, the sector struggles with a fundamental supply / demand imbalance.
To read the full NextGen Living report, click on the button below.
"This isn’t just a housing problem, it’s a social, health and economic crisis waiting to happen.
The solution requires a fundamental rethink of where we build new homes and, maybe more importantly, for whom."
The £32 billion opportunity
Over-65s consume half of NHS resources, making our aging population one of the most significant fiscal challenges facing the UK. Each resident in purpose-built seniors accommodation generates annual savings of up to £6,500 in local health and social care costs. Multiply this across the 5 million additional seniors expected by 2040, and the potential £32 billion healthcare savings become transformational.
Yet despite this, delivery remains woefully inadequate. Despite strong investor appetite, the sector struggles with a fundamental supply / demand imbalance.
To read the full NextGen Living report, click on the button below.
The birth of seniors build to rent
The UK seniors housing market is undergoing a tenure revolution that mirrors the same one North America went through. While the US market was once dominated by for-sale tenure options, it now operates over 3 million rental apartments, serving diverse tenant needs. The UK is already on a similar trajectory, with rental households aged 65+ growing 46% over the past decade.
Mixed tenure has become the norm, with 62% of UK operators now offering rental alongside traditional leasehold options. This approach accelerates lease-up while maintaining operational efficiencies, creating a win-win for operators and residents.
This evolution towards rental has given birth to a new asset class: seniors build to rent (BTR). However, unlike traditional BTR, seniors BTR prioritises incredibly comprehensive service delivery. A single rental payment covers housing, utilities, staffing, activity and care support – creating a hospitality-driven model that sits between residential and care home provision. The rental model removes the capital barrier that has historically limited access to high-quality seniors housing.
The birth of seniors build to rent
The UK seniors housing market is undergoing a tenure revolution that mirrors the same one North America went through. While the US market was once dominated by for-sale tenure options, it now operates over 3 million rental apartments, serving diverse tenant needs. The UK is already on a similar trajectory, with rental households aged 65+ growing 46% over the past decade.
Mixed tenure has become the norm, with 62% of UK operators now offering rental alongside traditional leasehold options. This approach accelerates lease-up while maintaining operational efficiencies, creating a win-win for operators and residents.
This evolution towards rental has given birth to a new asset class: seniors build to rent (BTR). However, unlike traditional BTR, seniors BTR prioritises incredibly comprehensive service delivery. A single rental payment covers housing, utilities, staffing, activity and care support – creating a hospitality-driven model that sits between residential and care home provision. The rental model removes the capital barrier that has historically limited access to high-quality seniors housing.
39%
of investors planning seniors allocation within 5 years
According to our NextGen Living Survey, 39% of investors with £60 billion invested to date in UK living are planning to invest in seniors within the next 5 years.
£32 billion
potential healthcare cost savings by 2040
Each resident in seniors accommodation saves the NHS £6,500 annually in health and social care costs. Across 5 million additional seniors by 2040, this creates £32 billion in transformational healthcare savings.
95%
typical occupancy rates in existing schemes
Seniors housing BTR offers compelling characteristics: tenants with considerable spending power, sticky income, low voids and minimal maintenance compared to other assets within the living sectors.
62%
UK operators now offering rental alongside traditional leasehold options
The majority of UK operators now embrace mixed tenure models, combining rental and traditional leasehold offerings. This strategy speeds up lease-up and preserves operational efficiency, delivering mutual benefits for both operators and residents.
50,000
annual unit requirement
The UK’s over-65 population will reach 5 million people by 2040, yet we’re only delivery 6,000 seniors housing units annually against a requirement of 50,000.
81%
growth in over-65s spending power by 2030
Over-65s spend £170 billion annually, with their spending power forecast to grow by 81% by 2030 as older generations live longer, healthier and wealthier lives.
The silver pound
Over-65s spend £170 billion annually, with their spending power forecast to grow by 81% by 2030 as older generations live longer, healthier and wealthier lives. The 'silver pound' represents a fifth of all household spending in the UK - particularly on discretionary goods and services and has the ability to generate exceptional economic value.
Meanwhile, seniors 'rightsizing' from large family homes releases housing stock back to the market, alleviating pressure across the housing chain.
For investors, seniors housing BTR offers compelling characteristics: tenants with considerable spending power, sticky income, low voids and minimal maintenance compared to other assets within the living sectors. Average lengths of stay exceed other BTR sectors, while occupancy rates consistently top 95% in existing schemes.
Capital is being raised for next-generation communities, with management teams pivoting from mixed tenure to full seniors BTR models. According to our NextGen Living Survey, 39% of investors with £60 billion invested to date in UK living are planning to invest in seniors within the next 5 years. Increased investment from North American operators with established track records is expected in the years ahead, bringing additional capital and operational expertise to the UK market.
The silver pound
Over-65s spend £170 billion annually, with their spending power forecast to grow by 81% by 2030 as older generations live longer, healthier and wealthier lives. The 'silver pound' represents a fifth of all household spending in the UK - particularly on discretionary goods and services and has the ability to generate exceptional economic value.
Meanwhile, seniors 'rightsizing' from large family homes releases housing stock back to the market, alleviating pressure across the housing chain.
For investors, seniors housing BTR offers compelling characteristics: tenants with considerable spending power, sticky income, low voids and minimal maintenance compared to other assets within the living sectors. Average lengths of stay exceed other BTR sectors, while occupancy rates consistently top 95% in existing schemes.
Capital is being raised for next-generation communities, with management teams pivoting from mixed tenure to full seniors BTR models. According to our NextGen Living Survey, 39% of investors with £60 billion invested to date in UK living are planning to invest in seniors within the next 5 years. Increased investment from North American operators with established track records is expected in the years ahead, bringing additional capital and operational expertise to the UK market.
Building at the right end of the market
If we are serious about managing demographic change over the next 25 years, the UK’s housing capacity needs to dramatically increase, but only in the right places. Building at the end of the housing chain delivers multiple benefits, including lower NHS costs, increased family housing supply, and a healthier seniors population. However, to deliver more, local authorities must prioritise seniors housing planning applications, recognising their role in addressing both housing and healthcare challenges.
The rental revolution is already underway, driven by investor appetite, operational innovation, and demographic necessity. The question isn't whether this transformation will happen, but whether policymakers and investors will move quickly enough to capture its full potential.
Written by Tom Scaife, Head of Seniors Housing, Knight Frank
Building at the right end of the market
If we are serious about managing demographic change over the next 25 years, the UK’s housing capacity needs to dramatically increase, but only in the right places. Building at the end of the housing chain delivers multiple benefits, including lower NHS costs, increased family housing supply, and a healthier seniors population. However, to deliver more, local authorities must prioritise seniors housing planning applications, recognising their role in addressing both housing and healthcare challenges.
The rental revolution is already underway, driven by investor appetite, operational innovation, and demographic necessity. The question isn't whether this transformation will happen, but whether policymakers and investors will move quickly enough to capture its full potential.
Written by Tom Scaife, Head of Seniors Housing, Knight Frank
