15 Dec 2017
I recently attended an annual conference on care homes and retirement living. It had a record-breaking attendance, cognisant of the growing awareness within the development industry of the importance of the care and retirement living sector in helping to meet our population’s diverse housing and care needs.
A message that spanned the conference is that there is growing demand but not enough supply in the sector. Policy and planning can play a fundamental role in helping to redress this imbalance, with the conference particularly noting that demonstrating need is ever more important in the planning process. It is worthwhile saying at this point that Lichfields’ Carepacity Toolkit could assist here, by evaluating the need for housing for older people, as well as assessing the potential of sites, quantifying benefits and impacts, and assisting in enabling delivery.
Whilst reductions in public funding have had their own impact on the supply and delivery of care and retirement housing, it was positive to hear at the conference that more funders are investing in the sector, which in turn is generating more opportunity for different models.
Funders include UK-based and specialist funding, Asia Pacific funds, Middle East funds and US real estate investment trusts. Retirement living investors include AXA, Legal & General, Goldman Sachs and AIG, alongside Bupa and Oaktree. This wide range of institutions involved demonstrates that the market is maturing and allowing for different developer and operator models. These include the “Propco” model, whereby an investor rents a property to an operating company – an “Opco”. This can be viewed as a safer investment route as it relies on returns from rentals without involvement in the care operation. It is a competitive model, due to a limited number of established operators resulting in potentially lower yields.
The “Wholeco” model provides an opportunity for the investor to construct a care operation, or partner with an operator. This model provides flexibility and potentially greater returns on investment, weighed against any risk derived from investing in specialist property and operating companies.
The “Smart Second Tier” model includes refurbishing modern or first generation care facilities. Here, investors support the operator with on-going investment and receive returns through increased rental income, or a share in the operating company. But refurbishment can be difficult if the facility continues operating, due to the impact of works on residents.
The range of investors and models allows for more flexible models to be provided for the end user too. This may include flexible ownership, rent-to-rent or the provision of progressive levels of care (“progressive care developments”) within a single development. Progressive care developments enable people to move in as a lifestyle choice and while still active, in the knowledge that their new home is future-proofed to respond to their potentially changing future health and care needs. There were also examples of successful, intergenerational developments discussed at the conference, for meeting the housing needs of the full age range of the population.
All of the models for this type of development align well with the National Planning Policy Framework, which states that local planning authorities should plan for a mix of housing to address the needs of different groups in the community, including older people.
However, as with any new innovation in the development sector, and as discussed in Phil Jones’ recent blog, it is vital that both the public and private sectors increase their knowledge and evolve their understanding of care homes and retirement living, and embrace innovative approaches to meeting the country’s housing needs. This is ever more important as delivering care and retirement housing is a “people industry”, whereby different age groups have different wants and needs.
Wider social benefits that are realised from providing appropriate care and retirement housing were also promoted at the event. They include the amount of care a resident needs to receive reducing after moving in, due to the well-being benefits of enhanced social networks alongside reducing the level of worry regarding the maintenance and financial pressures of running a home.
There was also acknowledgement of the wider benefits from moves to care homes and retirement living freeing up housing stock in the general market; the knock-on effects can also help to meet the housing needs of an area.
Challenges that the sector faces within the planning system were also discussed by the majority of speakers. They included the grey area around C2/C3 use classes and financial implications relating to council policies for affordable housing provision. This is a debate that will continue, particularly if “progressive care developments” grow in popularity.
My last blog touched on the different typologies of care and use class/financial implications, as summarised below. It is important to note that the Use Classes Order does not allow for homes to change from Use Class C3 to C2 according to the residents’ needs. It is argued by many in the industry that progressive care developments should be “sui generis”, which again has implications on affordable housing policies.
The practicalities of providing care and retirement homes are important considerations for developers, operators, agents and planning officers, as with any development. For example, the location of such development is a key factor for residents, who need to be able to access services and facilities, and receive visitors. Additionally, as highlighted by operators at the conference, there is reliance on public transport by many care workers and therefore the ability for staff to travel to work by this mode is an important factor in locating such developments.
Whilst there are challenges for this ever-evolving sector and it is critical that national policy increases its focus on advising how local planning authorities could do much more in meeting need. It was encouraging to hear that the industry is already using innovative funding and development methods – and wanting to disseminate details widely.
To discuss Carepacity further, please get in touch: email@example.com
 Property Company Whole Company Whereby the occupier rents their existing property to allow them to rent a retirement/care property.
18 Sep 2017
I recently presented at Lichfields' Newcastle Breakfast Seminar on the topic of elderly care accommodation. Or, as I have seen termed elsewhere, accommodation for those in their “extended middle age!”.
The older population, elderly people, those in their extended middle age, however termed, is growing. Indeed, the number of people aged 65 or over in England is projected to increase more than any other age cohort in future years.
Figure 1: Population projections by age cohort, England (2014=100)
Source: ONS, Lichfields analysis
As previously reported by Lichfields, this projection has wide-ranging implications as the country’s demographic profile is the foundation on which public finances are determined and major policy decisions are made. Another of the key implications of the population profile changing so markedly is that housing needs will change too.
In the same way that national policy is clear that local planning authorities (LPAs) must meet the housing needs of their local area, both for market and affordable housing (NPPF para 47), national policy is also clear that LPAs must meet the housing needs of different population groups, including older people (NPPF para 159). However, whilst the focus has been on building more houses in general (and rightly so), interventions have largely been concentrated on those at the start of their “housing career” (such as Starter Homes, First Time Buyer ISAs and so on). Significantly less focus has been placed on those in the later stages of their so-called “housing career”.
This is evident from the Housing White Paper which, in seeking to “fix our broken housing market” sets out some key targets, including:
225,000+ new homes to be provided per year (pg 9)
200,000 people brought into home ownership (para 4.21)
225,000 affordable homes to be built (para 4.26).
Yet there is no such target for meeting the needs of the older population. Rather, the Housing White Paper simply defers the issue, setting out the following:
Offering older people a better choice of accommodation can help them to live independently for longer and help reduce costs to the social care and health systems. […] To ensure that there is more consistent delivery of accessible housing, the Government is introducing a new statutory duty through the Neighbourhood Planning Bill on the Secretary of State to produce guidance for local planning authorities on how their local development documents should meet the housing needs of older and disabled people.
Whilst not tackling the issue head on, what the Housing White Paper does is reiterate the thrust of the NPPF - now in its fifth year – i.e. that LPAs are expected to have clear policies for addressing the housing needs and requirements of different groups, including older people. That said, some clear recognition of the severity of the current situation and an emphasis on the urgency required in introducing measures to start to address it would have been welcome.
This begs the question: do LPAs currently have clear policies for addressing the housing needs and requirements of older people? And in short, the answer is no.
Lichfields has analysed the 99 post-NPPF adopted Local Plans identified in its Planned and Deliver Of these:
29 do not have a generic elderly persons’ accommodation policy;
88 do not have a specific requirement for elderly accommodation; and
94 do not make specific allocations.
It’s a ticking time bomb.
As an industry, in both public and private sectors, we need to ensure that we understand, through robust evidence, what the housing need is for the growing ageing population. Alongside this, we need to understand what supply is currently available. Only then can we formulate clear strategies on how the residual need could be met.
To help evidence the need and in order to understand the opportunities to deliver housing for the ageing population, Lichfields has produced its Carepacity Toolkit.
Carepacity can assist in the planning process by:
objectively assessing the need for housing for older people and finding potential development sites;
understanding existing supply;
assessing the potential of development sites;
supporting the planning case by quantifying the range of benefits arising from the development of housing to meet the needs of the ageing population; and
enabling delivery through an understanding of the planning and financial implications of different typologies of elderly care provision, as summarised below.
Figure 2: Typologies of accommodation
Source: Lichfields analysis
To discuss Carepacity further, please get in touch: firstname.lastname@example.org
 Department for Communities and Local Government - Fixing our broken housing market (February 2017)