Recent attendance at the 2018 Association of Retirement Community Operators (ARCO) knowledge sharing day, hosted at our London office, demonstrated the growing interest in UK retirement living.
An ageing population, increased life expectancy and corresponding higher risk of developing dementia, alongside a woeful shortage of suitable accommodation makes the sector one of the most exciting and challenging areas in which to work. A far less saturated market than student living or multifamily, it provides a great opportunity to those willing to rise to the challenge.
But what do those thinking of entering the sector, be they developers, investors or operators need to consider, how can existing stakeholders fulfil the need for retirement living, and how do all of these parties ensure that their contributions result in viable business models?
The variety of models on the market, and their often confusing labels ("sheltered housing", "close care", "supported living"), don't need to be a barrier. From traditional care homes to innovative retirement villages, the market is open to new and creative solutions. A fundamental and decisive factor is the extent to which care provision will factor in your offering. For over-55s, downsizing and moving somewhere new may have nothing to do with physical or mental health needs, and everything to do with enjoying community. For others, often a little later in life, those same physical and mental health needs can be the sole reason for leaving the family home. And there are those in-between, who want to prepare a place that they feel secure and comfortable, with the hope that this will be their last move.
Whilst there is a lot we can learn from the more mature markets in the USA, Australia and New Zealand, the very underdeveloped nature of the UK market leaves it open to innovation. It turns out that an Englishman (or woman)'s home may not be their castle. For those seeking a low maintenance, flexible solution a rented offering may be far more appropriate than home ownership (and saves on SDLT).
The same "blank canvas" is part of the challenge for investors, who need to know that the sector is supported by robust legislation and self-regulation in order to boost confidence. The topic of event fees has seen some clarification from the Law Commission but yet more is needed. We need to find an alternative legal model which allows the flexibility for a landlord and a community to deal with those whose health means they are unable to continue in their existing community but without taking away from the security to feel supported and stable in later years.
Underpinning it all is real estate, meeting the fundamental need to have a roof over one's head. Still, a successful scheme should acknowledge the links between health and housing, and community and health. Both the design and the location need careful consideration, as does the service offering. Particularly for residents who are less able to travel, an urban location may be more accessible than a more isolated rural setting, although that must be balanced against land values and availability. Local infrastructure (dropped kerbs, accessible transport) must support the residents as well. This highlights just one of the roles that government (local and national) has to play.
That role is no more obvious than in the planning regime. Planners need to be ambitiously forward-thinking regarding accommodation for older people, ensuring there is adequate provision and clear guidelines. We welcome the draft London plan beginning to acknowledge the specific role of affordable accommodation for older person's housing but that is an initial step to be developed into more detailed approaches focusing on this kind of housing in London but also across regions and at a national level.
There is a further need to be forward thinking in the buildings themselves, to future proof them both in terms of technological advances and to build in adaptability for those whose needs are likely to evolve. Technology can play a role in end of life care as well as in making existing care models more efficient, and helping to ease the health problems that we know are associated with loneliness in old age. Technology can be incorporated alongside design to anticipate the challenges of dementia and facilitate an on-going quality of life. That is not to say it should not be handled with caution, particularly where it is used in conjunction with sensitive personal data.
At the heart of it all is people. Not just residents but staff as well. High turnover of staff is a turn off for consumers who value stability. This comes with a cost in terms of recruiting, training and retaining staff. Add to this the constantly changing requirements (see our note on the recent Mencap sleep-in case and its impact on the wider social care sector on page 9) and staffing is arguably one of the greatest challenges.
Even so, we see a role for all kinds of players, whether for investors who want to partner with operators, remain in the operation themselves, or develop and move onto the next project. From housing associations to pension funds, there are structures and financing options that can be made to work for all. Retirement living is not without its challenges, but ultimately, it is of benefit to us all to build up the provision in the UK. If we've piqued you're interest, we'd love to talk to you.