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Living longer, living well

by Michael Voges, Executive Director of ARCO (the Associated Retirement Community Operators), the trade association for providers of housing-with-care in the UK, representing both private and not-for-profit operators.

Let’s be honest: if you ask most older people today where they would prefer to live (and eventually die), not many would say ‘in a retirement community’. Many more would probably prefer to live in their own home, surrounded by their family and lifelong friends, tending the garden with enthusiasm and running up and down the stairs 10 times a day.

The bad news is that many of us will have to contend with a number of debilitating conditions as we enter our increasingly extended old age. The American surgeon and writer Atul Gawande likened the decline in our body and mind’s functional capacity to a car getting older every year. It’s not that it breaks down suddenly; things stop working slowly – first the windscreen wipers, then the electric windows need a fix. New tyres will do the trick for a while, and it’s fine even if the radio stops working. But once the clutch needs replacing… It’s the same for us humans – the hip goes first, then it’s glaucoma, diabetes, a bypass.

Vastly increased longevity will bring with it new challenges, and the need to find an answer to the question of how we support older people through extended periods of good, then ‘OK’ and, finally, perhaps, ill health. To be clear: the vast majority of older people will be able to live – and die – at home (or die after short periods of hospitalisation), which is what they want. As a society, we need to become much better at adaptations and providing services into people’s homes.

The new kids on the block

However, a significant and growing number of older people are seeking out new models of living which enable them to live independently, safe in the knowledge that there is a safety net built in that will allow them to remain in their homes for as long as possible. The good news is that we already have that solution. Housing-with-care schemes, such as extra care housing (the private sector favours the term retirement village), aim to provide a ‘home for life’, with care and support available from a 24/7 staff team, meals served in dining areas or restaurants, and facilities such as shops or hair salons, gyms and libraries. Demand for retirement communities has been extremely high over the last few years, and there are no signs of this ebbing off.

While care and support is crucial, it would be a mistake to over-emphasize this angle: these services enable people to live the lives people want, and reasons such as making new friends are often the main drivers of a move. Escaping loneliness is a big factor too: once those lifelong neighbours are replaced by young professionals and families who are often out, even a home full of memories can start feeling empty.

Yet, the housing-with-care sector in the UK is underdeveloped, with only 0.5% of the over-65s living in a retirement community with 24-hour staffing, care provision etc. In other countries, the concept is much more widespread and understood, with around 5% of the over 65s in New Zealand living in a retirement village with care, for example.

Older people’s needs and aspirations are changing

There are of course other housing options, which do not provide extensive services and facilities – sheltered housing being the main type, with around 350,000 units spread throughout the UK. While often popular, units can at times be difficult to let. I think it is fair to say that sheltered housing cannot always be described as aspirational homes for today’s generation of older people, let alone tomorrow’s generation. This is partly to do with the fabric (often dating from the 70s and 80s), but also with the limited service offer – many people understandably want to remain in their homes for as long as possible. When they do make the move, they do so in the hope that this will be their last move. A sheltered housing scheme that is not able to offer more intensive levels of care and support may thus lose some of its attraction – despite the often brilliant work by staff, who go above and beyond their duties to ensure residents can remain in situ.

Housing associations can rise to the challenge

But back to the housing-with-care model. In the media, retirement communities are often portrayed as gated communities for “silver foxes” and older ladies with pearl necklaces. This is grossly unfair – I have been to many high-end retirement communities (which ARCO also represents), and they provide a fantastic service (and are very willing to share learning from this with the not-for-profits within ARCO). In addition, what most people don’t realise is that high-end schemes represent a small minority of schemes in the UK - two thirds of the ‘housing-with-care’ sector for older people in the UK is delivered by housing associations in the form of ‘extra care’ (see chart/graph).

To my knowledge, the UK is the only country which can claim to have developed a housing-with-care offer for older people with more moderate means. Indeed, we will be hosting a delegation of officials from New Zealand in the autumn, keen to learn more about the way extra care has developed in the UK.

As a nation, this is something we should be proud of. It is also something that we need to preserve – the LHA cap is certain to have an impact here. The statistics in the chart also point to one of the greatest opportunities, namely the gaping hole in the ‘middle market’. If you have too much money to qualify for an extra care scheme, but not enough money to buy into a high end retirement community, you will be extremely hard pressed to find a suitable property at all. Housing associations are well placed to venture into the burgeoning market for private payer retirement communities.

For a start, ‘patient capital’ is not an alien concept to them: business models based on deferred fees are becoming more popular both with consumers and operators alike. This enables an ‘enjoy now, pay later’ model for the resident (which is well suited to many of today’s relatively asset rich, but income poor, older people). However, it also means that the operator will need to wait for this returns. This requires long term thinking and a willingness to engage in ongoing customer relationships. Traditionally, this has been anathema to retirement housebuilders – but is business as usual for housing associations.

‘Vertical villages’

Another factor is location. The first wave of retirement villages in the UK were built mainly in rural or semi-rural settings, often incorporating grand country mansions. There are some magnificent examples of these in the UK, and I have no doubt that older people will continue to choose them. However, research suggests that many potential residents want to stay where they are, close to their current homes, and within the social networks they have formed over decades. So retirement communities are increasingly moving into suburban or even urban areas. In my view, we will be seeing many more ‘vertical retirement villages’ (like the ExtraCare Charitable Trust’s Earlsdon Park village in Coventry).

Housing associations are likely to benefit from this, as they are familiar with density and apartment living. Many have also built strong relationships with local authorities, which might give them access to attractive sites, for example as part of a portfolio approach under which a provider builds a number of retirement communities, with the mix dictated by local need and the business case for the location in question.

Innovation and focus

Challenges for housing associations delivering housing-with-care are two-fold. On the one hand, the ‘extra care’ model is under threat from a general tightening of the belt and the LHA cap. I think housing associations need to avoid seeing themselves solely as delivery arms of the government, both local and national. The disconnect between the two paymasters (local authority for care and support, DWP for rent and service charge) means that relying on both to have the sector’s best intentions at heart can lead to funding shortfalls. If you’re happy being told what to deliver, don’t be surprised if you are then told which prices to accept.

The other challenge is about courage and focus - as outlined above, the ‘middle market’ for retirement communities is up for grabs. Building for this market segment will also release under-occupied houses in the general housing market, without resorting to punitive measure such as the bedroom tax. This in itself will contribute to a healthier supply of housing in the UK. Therefore, housing associations could and should be part of the growth of the ‘middle market’ for retirement communities. The danger is that registered providers will be too busy fixing their past and present stock, and will lose sight of the need to develop the retirement living options of the future. It takes courage for a board to invest in a new sector. With an opportunity as large as this, it will be well worth the effort.