Housing for older people: An age-old problem

When Winnie the Pooh author AA Milne penned his immortal poem “When I was One”, he neatly summed up the instinctive feeling of many, that old age is always a distant future that we can’t envisage reaching. As all ex-schoolchildren of a certain age know, the verse ends “But now I am Six, I’m as clever as clever, So I think I’ll be six now for ever and ever.”

Well for me at least it’s been downhill since then, and sadly none of us is able to stick at six forever. Having now sailed past my own half century, I take a more sanguine view of older age: given that it really is going to happen to me, where would I like to live and is it affordable? As our population of older people grows (a 90% increase in those over 65 by 2033), these questions are not far from all our minds, and represent one of the most compelling social problems of our time.

As such it is something that is taxing some of the best brains within local government, as was evident in Chester a few weekends ago for the annual County Council Network conference. While the challenges of the slashing cuts to local authority budgets provided the backdrop to much discussion at this event, the challenges around adult social care were in the foreground.

The public sector needs to bring its asset base into use in a strategic matter, establishing a pipeline of specialised housing

Older people want a home they feel safe and secure in. They want to be part of a community, to be able to contribute and have access to the care they need. A significant minority of older people prefer, or indeed need, specialised accommodation, such as a residential care homes, extra care development or a retirement village. Most prefer a home that is integrated into their communities. Many currently have to face a difficult move to a residential care home at a point of crisis when their current care needs cannot be met.

Older people are generally a wealthy sector of society: their incomes increased in real terms by 44% between 1995 and 2009, 75% own their own property and the value of their housing equity is estimated to be anything from £741bn to an astonishing £3tn. At the other end of the spectrum, however, many qualify for public sector support to fund their care needs (having assets of less than £23,250), and this group of people is expected to grow with the forthcoming Care Bill. This bill is anticipated to increase the threshold at which older people receive support to finance their care needs to £123,000, and set an upper cap for the cost of care of £75,000. 

A massive 45-60% of local authority budgets is spent on adult social care. Typically local authorities rely heavily on residential homes (either their own properties, or block contract arrangements) to meet the needs of those who qualify for their assistance. The amount that local authorities pay for such services ranges significantly and unpredictably from place to place - with many probably paying more than they should.

But this challenge need not be funded solely by the public purse, and increasingly we see private sector investors stepping forward to play their part. Typically, this is through quasi-PFI deals with an operator or the public sector taking occupancy risk over a 25-year period, or a roll-over private equity model where investors are restructuring and investing in care homes which are then turned over quickly to make an asset growth return.

This is making helpful inroads, but we need to see a further turn of the wheel, through the establishment of new kinds of partnership. The public sector needs to bring its asset base into use in a strategic manner, establishing a pipeline of specialised housing. This in turn will facilitate a more strategic response from the private sector, and leverage a reduction in its own long-term costs of providing care.

There needs to be a shared approach to the occupancy risk of specialised housing, combining the investment from individual owner-occupiers with a joint public and private response. For instance, there are areas where extra care is provided through a mixture of public and privately funded beds; Oxfordshire has seen examples of such schemes.

Developing a solution to housing the elderly must at its core, be based on a detailed understanding of the specifics of each local area, and the design solutions which enable alternate uses. The private sector, with support from the public sector, needs to provide downsizing or downsize-able products with access to care as part of the mix in new housing developments.

At Cornerstone, we are helping to broker this new type of partnership. In doing so, we hope to be part of a new wave of communities that are able to cherish older people and enable them to continue to be part of, and play a role in, their local communities.

Tim Byles is chief executive of Cornerstone Property Assets