Understanding the retirement housing market


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Paul Teverson at McCarthy & Stone presented to the Extra Care Annual Conference in December 2012 and provided an outline of the opportunities and challenges of developing housing in the retirement sector. The presentation was delivered in partnership with Prof Andrew Kerslake of the Institute of Public Care at Oxford Brookes University.

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Understanding the retirement housing market

  1. 1. Understanding our market:planning ahead
  2. 2. Care and Support White PaperUnique in that… First real legislative acknowledgment of the role played by the market in delivering social care. The importance of housing (mentioned no less than 53 times)
  3. 3. Care and Support White Paper “The government supports the diverse range of care providers that currently offer care and support, including user and carer led organisations, small and micro enterprises and social enterprises.  To strengthen this diversity, the Government will introduce a duty upon local authorities to promote diversity and quality in the provision of services.  To help local authorities carry out this duty, we are offering support to every local authority to create a market position statement or to develop their existing one.”
  4. 4. Care and Support White Paper Government announced a consultation this Autumn to cover three areas:  Strengthening and clarifying the responsibilities of local authorities in relation to the market.  The collection of better market and provider intelligence.  To what extent further, targeted, action to address provider distress and failure is necessary.
  5. 5. Care and Support White Paper “Housing plays a critical role in supporting people to live independently, and helping carers to support others more effectively. However, the NHS Future Forum reported that the NHS spends £600 million each year treating people due to severe hazards in poor housing, the vast majority of which are associated with falls. Unsuitable or badly maintained housing is putting the health and wellbeing of thousands of people at risk”.
  6. 6. Impact of the current economicsituation on the market? Cheaper to borrow money now but harder to obtain due to banks caution. Low interest rates mean people eat into their capital quicker. Harder for older people to sell their property which may make it harder for people to move. If in the future there are labour shortage and / or wage inflation it will hit social care first and foremost, given it is a minimum wage based industry. An upturn may tempt many small residential care providers to sell, leading to less supply/ more market consolidation.
  7. 7. Current drivers behind the market? High level of home ownership amongst older people. Around 75-80% of older people are home owners, half of all housing equity is held by the 65and over. An old age population that is more used to moving house based on life circumstances. New DH funding imitative. Sheltered housing estate the single biggest asset held in trust for older people in this this country.
  8. 8. Current drivers behind the market? High start up costs. General level of state support in England & Wales diminished. Little knowledge of what works or what the public desires in a very young market. Poor image for sheltered housing. Unreceptive planning environment.
  9. 9. What do we know about whatconsumers want Location Design and desirability Space Low maintenance Safety and security No hidden prices and affordability
  10. 10. IPC’s role in development IPC leading on the national ‘Developing Care Market’s programme for DH and ADASS. Publishing three papers today (copies available on the IPC stand). Delivered the SHOP guide as a step towards wider thinking about Housing choices for older people and how they might be delivered. Engaged with providers and strategic commissioners in exploring how the supported housing market might best be encouraged and stimulated.
  11. 11. What is market facilitation? Based on a good understanding of need and demand, market facilitation is the process by which strategic commissioners ensure there is diverse, appropriate and affordable provision available to meet needs and deliver effective outcomes both now and in the future.
  12. 12. The Market FacilitationFramework
  13. 13. Market intelligenceDemand What kinds of numbers where? How is demand currently being met? What does the future demand for housing suitable for older people look like? What kinds of housing do older people want, under what kinds of tenure, at what sort of price?
  14. 14. Market intelligenceSupply What kinds of housing where ? What do we do with what we have got? What kinds of housing where in relation to which populations? What understanding of consumer behaviour? How much market testing has gone on? What are the blockages to be overcome and how? Housing in relation to planning, health and care.
  15. 15. Market structuring Stimulate the consumer market with a taste of what might be possible. Get elected members in on the vision for the future. Get the offer to developers right. Getting health on board. Planning!
  16. 16. Market intervention Get support from across the sector for a vision of older peoples accommodation. Provide a stimulus package to encourage the right developments in the right location. Offer flexible tenure arrangements to suit the local market. Ensure that housing takes demand out of the system
  17. 17. McCarthy & Stone: our place in themarket Currently 560,000 specialist independent living dwellings for the elderly (2% of housing stock). Of this, 106,000 units are for owner occupation. There are 35,000 Extra Care units (90% rented). Although we have a 70% market share, our market is small – we sold just 1,300 units in 2011. Two main model types. Our Assisted Living Extra Care model has evolved since launching in 2000. Ownership-based model (125-year lease). Increased focus on management services and on- site personal care / support. Reinforce the importance of site location.
  18. 18. Our place in the marketFigures: Elderly Accommodation Counsel
  19. 19. Who are our customers? Owner-occupiers looking to continue ownership. Majority are single, widowed women, but this is changing. Average purchase age is 78, rising to 83 in Extra Care schemes, and rising. Most move from five miles away. Although older people are less inclined to move, over 130,000 still change homes each year in UK – therefore the market exists. Key reasons for move are currently needs based:  Declining health, isolation / loneliness.  Need to downsize / smaller garden.  Equity withdrawal.  Be nearer family / facilities.
  20. 20. What do our customers say? 92% satisfaction rate. Personal: increase in sense of safety and companionship. 64% report improvement to health and wellbeing. Fewer hospital admissions and GP appointments. More likely to use local amenities and a facilities. Wish they did it earlier. BUT, if satisfaction is high, why is supply so low?
  21. 21. Market challenges Wider problems of the housing market. Affordability: our properties are priced circa 20% below general house prices, but still out of reach of many. Rising development costs and land competition, meaning many areas where we cannot build. Importance of design: need to be more ‘aspirational’ / HAPPI and appeal to an increasingly diverse group, but balance this with affordability. Building retirement housing is a complex form of accommodation to deliver, so few providers try. Greater clarity needed from industry on service charges / fees.
  22. 22. Market challenges But, the biggest challenge for providers is when the planning system doesn’t recognise the need for older people’s housing. Lack of integration and policy connection with housing and social care departments. Many applications refused, or never come forward. Impact of the Community Infrastructure Levy and other planning obligations. Lack of encouragement in Local Plans. National policies are encouraging delivery, but what is their impact locally? Different impacts across regions.
  23. 23. Market opportunities Over 65s will grow from 10m to 17m by 2033. Growth fastest among frailest (over 85s) 60% of all household growth will be over 65s. Retirement housing in Australia and New Zealand is 17% of all stock (just 2% in England). Increased choice, supply and providers should help affordability. University of Reading: strong potential to grow from delivering circa 4,000 units a year to 16,000. Shelter / YouGov poll in 2012: a third of all older people would consider retirement housing if it was available – demand is there.
  24. 24. What can be done? Existing providers to continue to improve offer. New entrants to be encouraged into the market. Local Government support – a five step plan:  High-level buy-in.  Comprehensive needs assessments, evidence base and understanding.  Housing / planning strategies, Market Position Statements .  Health & Well-Being Boards and CCGs.  Partnership with providers (for instance, to deliver DH’s £300m fund). Planning toolkit published today.