Incentives and barriers to co-living in later-life

Humans are not used to living alone. Always communal beings, advancement of the species has been characterized by our ability to organise, to communicate and to look after each other.

So the challenge of living alone presented to a large and increasing number of people who live in single-person dwellings (around 30% of all households) is a new experience and therefore a new stress for us.

What's more, for the millions of older people living alone this is far more of a stress. Most would have grown up in a time and a place where they were familiar with communal living of some sort; many in families, some in multi-occupancy homes, most with relations living nearby and continuing to live in their local neighbourhood.

When time for retirement comes there are plenty of options today for secure and safe living in future … if you can afford them. Unfortunately not everyone can, and the generation of final salary pension and mortgage-free home owning retirees is coming to an end.

In their place a generation of relatively poorer and older retirees is arriving. Today a large and increasing number of those over 40 years old do not own property, have more mortgage to repay if they do, and also are much less likely to have a full salary pension or sufficient private pensions; many have none. For them renting is the norm and in many cases private renting.

How will they afford their later years and be able to live well?

‘Later-co-living’ as one solution

Co-living makes financial sense. For the individual the simple act of sharing the costs of owning/renting and running a house enables those sharing to make savings averaging 46% to 55% (1). Add to this the advantage of lower unit building costs enjoyed by new build compared to converted older buildings and the overall savings at a population level can be much greater.

So we should encourage ‘later-co-living’. Why should young professionals and millennials have all the fun anyway? But despite much speculation about how society and individuals will fund later-life why has co-living (a.k.a. house sharing) not taken off as much as it might?

Barriers to home sharing

Home sharing makes not only financial sense but also provides companionship, security and longer-term independent living before the dreaded nursing home. Yet there are barriers to further house sharing.

Firstly, later-life can involve special needs. Either through medical necessity, frailty or vulnerability, the older one gets the more likely extra care or residential care makes sense. This form of co-living is well developed but is not relevant to all and there are many people who resist taking that route, even in advanced years. There are many more people who are already experiencing financial difficulty or loneliness in middle-age, never mind old age. They need to plan ahead as things will probably only get worse but they too seem hesitant.

There is firstly the question of availability of suitable accommodation. Even if you do want to share finding a suitable place can be difficult. People aged 40+ who home share want not only their own bedroom but also their own bathroom too(2), they want enough communal space to live comfortably and maybe to entertain a guest from time to time, and they need sufficient storage space. It needs to feel like a home not just a room. This combination of rooms and space is not easily found in most towns and cities.

Much has been written about how technology and new building techniques will allow us to create new easy living / co-living properties, so I won't say too much more about that here, but it is worth noting that presently many of these properties are aimed at younger professional and millennials and offer only small rooms, perhaps more suitable for shorter stays. This will have to change.

Instead, what I'd like to focus on here is the another barrier - people's reluctance to share a home with anyone other than a partner, particularly in later-life. There are a number of reasons for this and understanding them will hopefully lead to policies and social innovation to overcome them.

Firstly there is the ambition to own a house. Among those who grew up in the 70’s, 80’s and to the present day, home ownership and having ‘your own place’ is a big part of feeling you’ve succeeded in life. Sharing is seen as being for students and is looks down upon.

Added to this, ownership of property has been the easiest way to get rich for the older generation, resulting in the buy-to-let gold-rush of recent years. Down-sizing is one funding route for those lucky enough to have their own home and in many cases is seen as a sort of pension.

Lastly, the rise of individualism in the ‘it’s all about me’ society has encouraged people to seek out self-expression in their choice of everything from home furnishings to entertainment. This pulls against communal living, so finding a way to maintain personal space whilst sharing the cost of living is key.

Having shelter is a primary human need and motivation, so we should not be surprised that people want ‘a place’. But attitudes to sharing will have to change and as a species we will have to get better at sharing (again).

Home sharing incentives

Demographics, added to a deterioration in savings and personal finances in general, suggest later-life will be longer and less fun for many people. Left with low-income jobs and relatively small pensions, there is already evidence that a disproportionate amount of household income is being spent on rent. When that household is just one it’s even harder. Individuals will not be able to afford to pay this into retirement and neither will government.

Something must change. Either political change is needed to provide redistribution of income to such groups - the direction of travel in government policy seems away from this at present - or social change is required so that more people embrace sharing a home, so reducing the cost of their rent. The latter could be more politically appealing.

Such social innovation needs to accompany design innovation. It will involve both a concerted effort to build more properties designed for sharing in later-life, with larger bedsit en suite rooms within shared living rooms and kitchens, as well as encouraging and incentivising people to share.

The incentives for more house sharing, especially in later life seem clear. Government has an incentive to encourage home sharing as it would provide a useful way to constrain the currently increasing cost of housing and caring for an ageing population, reducing the burden on public finances. For example, there is already an incentive through the Government’s Rent a Room Scheme (opens new window).

House builders have an incentive as it would create a new customer base similar to the younger co-living renter or purchaser.

Middle-aged people who do not own a home or have a large pension and live alone have the biggest incentive. Making savings averaging 46% to 55% from home sharing would provide them with a viable alternative to living alone and paying out most of their limited income on rent and household expenses.

The future will see people join together to enjoy ‘later-co-living’ properties where people age 50+ can live comfortably for a reasonable rent and over an extended period. Ideally those properties will be built within local communities, rather than away from the neighbourhoods in which people have lived most of their lives.

Residents will be among like-minded people as well as have a ‘place’ of their own. They would be living like humans have for many years – together.

References:

 

1. Cohabitas research report - Attitudes to house sharing among mature adults (opens new window), Sep 2017 - People living with just one other person on average pay 46% less from housing than a person living alone, and on average 55% less when living with 2 or more other people.
2. Cohabitas research report - Attitudes to house sharing among mature adults, Sep 2017 – 85% of respondents say that ‘Having a bathroom of my own’ would be Very important or Important and is the most important feature of the ideal house share.