How to solve a problem like retirement homes
Lack of planning, high stamp duty and few financial options mean that demand will soon outstrip supply
Jane Slade The Times
Friday July 22 2022
If political parties have tried to woo generation rent with Help to Buy to assist first-time buyers on to the property ladder, now may be the time that they turn their attention to last-time buyers.
Even though more homes designed for older people are being built than ever before, there are still not enough. Some within the industry are warning of a national care crisis. Just 8,000 later-living homes are being built a year when 50,000 a year are needed for 1.3 million retired people.
“Government instability is not good for the future of older people,” cautions Nick Sanderson, the chief executive of Audley Villages, where retirement homes at its newest village, Sunningdale Park, in Berkshire, start at £759,000 for a two-bedroom apartment; and at mid-market Mayfield, which has 225 one and two-bedroom homes, in Watford, prices start from £334,950.
“Social care is still in a bad shape so there is even more need to keep people out of care homes and independent for as long as possible. It is important to have government support in finding solutions. Land supply, regulation, planning and finance are barriers that need to be cleared if there is to be expansion.”
According to Knight Frank estate agency and the law firm Irwin Mitchell, planning is the biggest hurdle to growth for retirement housing. Their research revealed that more than a third of local authorities have no policy in place to support housing for older people. Of 326 local authorities in England just 76 had clear policies and dedicated land. Conversely, housing policies are in place for key workers and students.
There is also huge frustration in the time it takes for planning departments to approve schemes. Churchill Retirement Living, which builds mid-market retirement developments all over the country, has 16 planning applications awaiting approval and 13 planning appeals awaiting determination. Together they total more than 1,000 homes.
Spencer McCarthy, its chief executive, complains: “Our sites are nearly always brownfield, within town centre locations, and in accordance with policy our applications should be determined in 13 weeks. Unfortunately they never are. Some can even take up to two years.”
Appointed secretary of state for levelling up, housing and communities earlier this month, Greg Clark will head up the government task force on housing for older people. The task force was announced in the levelling-up white paper in February but the first meeting has yet to take place. Since the paper, the number of people aged 65 and over in the UK has risen more than 80,000.
There is some early optimism because Clark is the MP for Royal Tunbridge Wells, which is set to become the retirement capital of the UK.
Britain is well behind other countries. New Zealand has had a Retirement Villages Act since 2003 and a code of practice since 2008. Developments must be registered and comply with the code. There is clear regulation and residents have rights. So why is it so hard for the UK to have the same?
John Tonkiss, chief executive of McCarthy Stone, Britain’s largest retirement housebuilder, wants more. “The government needs to prioritise not just the building of new homes for older people but to make 10 per cent of new supply specifically for older people,” he says.
He also thinks those moving into a retirement community should be exempt from paying stamp duty: “This will encourage new supply as well as help older people to downsize.”
The Associated Retirement Community Operators (Arco), an industry body, has been developing a code of practice for its private and not-for-profit members. It has also initiated the term “integrated retirement communities” (IRCs), to describe those developments offering care and other facilities, and is backing leasehold reform.
The retirement community creators Retirement Villages Group (RVG) and Inspired Villages are looking to pioneer “leasehold plus”, where leases revert to the operator after an owner sells, to offer more security to the consumer. “Financial flexibility is key,” said Will Bax, the chief executive of RVG, at the Arco Annual Conference this month.
RVG wants to double the number of its 16 retirement communities in the next ten years. It also wants to launch new-generation communities with retail and leisure facilities that are open to the general public, reflecting a more strategic and innovative streak within the sector.
However, it is the fear of rising service charges and what are euphemistically referred to as exit fees that continue to put off prospective buyers. The hike in the cost of living has exacerbated this and even prompted Rangeford, a retirement community developer and operator, to launch a “no household bills for two years” initiative to attract buyers.
Affordability is another concern. McCarthy Stone is predicting that fewer retired people will be able to afford to buy a retirement property in the future due to rising construction and land costs. It is using light-gauge steel framing at its own schemes so it can build off-site before installation, which is cheaper.
The housebuilder started offering rentals a few years ago and has just launched a part-buy part-rent option to attract older buyers who don’t want to buy a home outright when they might only live there for a few years. Its part-ownership option, delivered through Homes England’s Older Persons Shared Ownership scheme, will be offered in the North and Midlands, where homes are cheaper, to help less affluent buyers.
Philip Norcross and his wife Edna, both 86, lived in Harpenden in Hertfordshire for 50 years before moving to their three-bedroom Adlington Retirement flat, in Southport, in Merseyside, last November.
They paid £300,000 for their property at the Sailings. “We could have bought three of these for what we sold our home for,” says Norcross, a retired banker. “We certainly moved in the right direction. An apartment in Harpenden like this would have cost about £700,000.”
Retirement operators have a variety of purchasing models, with rentals and part ownership proving popular. LiveMore Capital is one of a few specialists offering mortgages on retirement homes — its retirement interest-only mortgage has no end date. Rates are competitive, ranging from five-year fixes, variable or fixed for life.
“Customers find it difficult to get mortgages against those properties,” says Leon Diamond, LiveMore’s chief executive. “We take an old-style local banking approach. We look at your assets and liabilities, pension and investment portfolios to see if you can afford to make interest payments. But we can lend up to 50 per cent loan-to-value on an age-dedicated home. People are paying off their mortgages by drawing down on their pensions, but they don’t have to.”
He adds: “ The 50 to 90-plus age demographic is underserved. Most think equity release is their only option — but it’s not. Our oldest customer is 92.”
All the operators are agreed on one thing: the biggest barrier of all is the family home. As James Ahearne, the development director of RVG, explains: “Our customers are discerning, so the product has to have a strong pull factor to convince them to leave their beloved homes.”
Jane Slade is the founder of the retirement property portal retiremove.co.uk
Considerations
- This is a small scale development, for local people, by local people, just seven bungalows set well back from the High Street.
- We have lived adjacent to The Paddock for 50 years and will continue to do so.
- Most developers do not build detached bungalows for local people and no other site in Riseley is offering to do so.
- These bungalows will free up large family houses in Riseley.
- Traditionally this would be considered as an infill site.
- Bedford Borough Council back in 1984 designated part of The Paddock as a Village Open Space/View and they are convinced that it serves Riseley better if it remains totally undeveloped. The Paddock currently has no public access and we propose retaining an open space at the front together with providing 11 allotments, which will have public access. This is a much better use of the site than just keeping it as it is.
We have carried out extensive studies and based on our previous planning application Bedford Borough Council have confirmed that:
- the bungalows will not contribute to flooding problems in the High Street
- the site is well related to a defined Settlement Policy Area
- the increase in traffic will be negligible and there are no highway issues
- that there are no ecology issues
- that the density proposed and the space around the buildings including garden depth, would be inkeeping with the character of the built form within the village of Riseley.
- the proposal is not considered to give rise to adverse impacts upon neighbour amenity with respect to overlooking, loss of privacy, loss of light or overbearing impacts
- there will be plenty of car parking spaces and there will be no need for any parking on the High Street
- extensive archaeological digging has confirmed that there are no archaeological issues
- the Riseley Housing Needs Survey, July 2019, indentified a need for fifteen, 2/3 bedroom, retirement bungalows for local people
- The Paddock is in the Riseley North Conservation Area but because of the careful and thought through layout and the fact that the hedges and mature trees remain untouched, coupled with the low roof lines of the bungalows, it will have no detrimental impact on the Conservation Area or on the Listed buildings on the High Street.
Village Open Space Policy - fine print.
Bedford Borough Council dropped the word "Important" in 2013
Part of The Paddock is designated by Bedford Borough Council as a Village Open Space, Policy AD40 and they specifically consider that:
- The gap provides visual relief in an otherwise built up area punctuating the street scene;
- The open space assists the transition between village and countryside providing a soft edge to the village which is pleasing visually.
The planning inspector who reviewed the 2013 Bedford Local Plan made this comment:.
"I am concerned about the overly stringent wording of Policy AD40 which states that development will not be permitted on land designated as a village open space. I consider that in reality an important consideration in determining proposals on such areas will be whether the reasons for designation would be compromised if the development was allowed to proceed. There may, for instance, be occasions where the loss of a small part of an open space may not prejudice the overall integrity of the space or undermine its contribution to the local area. Furthermore it may be the case that the retention of a designated space may be outweighed by other material considerations, for instance significant community benefits that could not otherwise be achieved."
As a result the statement below was added to the Village Open Space Policy AD40 in the adopted plan:
Development will not be permitted on land designated as a village open space unless it can be demonstrated that the reasons for designation are not compromised or that other material considerations outweigh the need to retain the Village Open Space undeveloped.
Not compromised
- The gap provides visual relief in an otherwise built up area punctuating the street scene;
Our carefully designed layout does not compromise this reason for designation. The retention of the mature trees and hedges means that the street scene remains essentially unchanged.
- The open space assists the transition between village and countryside providing a soft edge to the village which is pleasing visually.
Again our carefully designed layout will not compromise this reason for designation. The real transition to the countyside is further down the High Street. There is no view into the site except through the entrance and there are no views through the site to the open countyside. With the low roof lines of the bungalows and the low density of development and the open space at the front of the site, we will continue, as much as we ever have, to assist the transition between village and countryside providing a soft edge to the village which is pleasing visually.