‘Politicians just don’t understand’: the case for retirement housing reform

Eugene Marchese spent eight days earlier this month in a public inquiry, arguing the case for retirement housing with Elmbridge Council. The co-founder of L&G-backed Guild Living was fighting for consent for a 222-flat city centre scheme in Walton-on-Thames, following planning refusal last October. “Trying to explain what housing with care is and how it differs from care homes was one of our biggest challenges,” he says. “We spent hundreds of thousands of pounds with experts trying to explain to the council that housing with care is actually a good thing for the community. “We’re not talking about gated-off enclaves of old people. It’s an active, vibrant lifestyle. The politicians who make up the decision-making processes at local council level just didn’t even understand it.” Political blockages like this are contributing to the UK’s failure to provide retirement housing that meets growing demand from elderly people. Experts estimate that the UK is developing only around 8,000 retirement homes a year, little more than a quarter of the 30,000 needed. Marchese says more advanced markets such as the US, Australia and New Zealand now operate without these kinds of misunderstandings. But here, he adds, the problems are caused by government policy. “The notion that we can look after the fastest-growing segment of the population individually within their own existing homes, which are now typically not suitable for their changing circumstances, becomes a challenge too big to take on,” he says. The case for retirement living reform is clear, supporters argue – to incorporate planning, leasehold length flexibility and tax changes to better support the elderly. And calls for the government to take action are growing louder in the wake of the pandemic, most recently with the Associated Retirement Community Operators’ open letter to prime minister Boris Johnson calling for a task force and plan to expand housing provision. ‘Political misalignment’ Buy-in at local level is hit or miss, largely dependent on political engagement to combat the “stigma” of stereotypical gated communities, says Will Bax, chief executive of Retirement Villages Group. Bax’s best experiences have been similar to those in Woking, where late last year his company gained consent for 197 flats at West Byfleet, with detailed plans unanimously passed last week. Where “policies do exist and that political will at the local level exists”, there is greater engagement and better outcomes, Bax says. Unfortunately, he adds, that is the exception, not the norm. “There is clearly a political misalignment that starts with policy and an absence of it on the government’s agenda, and that flows through to a situation where only 50% of local authorities have any informed point of view on how they’re providing for their ageing populations,” says Bax. Former housing minister Mark Prisk says this planning lottery is a symptom of “a deeper issue”. “District councils are very often making planning decisions which are separate from county councils which deal with social care,” he says. “It’s an area where the council brings just general knowledge of healthcare and no more than that.” Prisk wants to see central government, NHS England and county councils working together. “The separation has created a silo thinking, and you end up with a planning committee that comes at it from a point of view of some general knowledge and perhaps a hint that maybe bungalows are the answer,” he adds. That guidance means committing to hard targets at the local plan level. “In order to kick-start change, you need something where local authorities say, ‘We’ve got to do this, it’s not a question of choice,’” Prisk says. We’re not talking about gated-off enclaves of old people. It’s an active, vibrant lifestyle Eugene Marchese, Guild Living Patient capital With costs rising and revenue slashed by the elimination of ground rents in leasehold reform, the industry has called for stamp duty relief to incentivise buyers and improve viability. “In Australia and New Zealand, when they eliminated stamp duty for retirement communities, the government stamp duty pot exploded,” says Marchese. “It was that second and third sale they were releasing into the market.” Prisk also supports exemptions for last-time buyers. “I’m open to the notion of taking SDLT away to unlock the rest of the chain,” he says. But, he stresses, tax changes should be customer-focused, whereas funders should be incentivised by certainty and stability: “Investors will come into the market if the regulatory framework is clear and consumers understand what they are buying.” During his tenure in government, Prisk supported the establishment of build-to-rent as an asset class. “It’s making sure we’ve got enough of the major players in the market with patient capital. Thankfully in this market we have that,” he says. The sector continues to attract long-term backing, such as private equity giant Lone Star’s recent acquisition of McCarthy Stone, and Macquarie and John Laing’s £200m BTR backing for McCarthy. Prisk calls on the current housing minister to lead a task force to spur on retirement housing reform. That, he says, will encourage “a joint approach on planning, building regulations, fiscal incentives”. As a result, local government would gain “a clear, consistent message from central government about what they’re expected to achieve”. And the private sector is keen to get around the table with the government to work out these plans. “The big ask is this task force and mandating it properly and urgently,” says Bax. But he is optimistic. “If we can see changes in those areas alongside this new generation of product coming, my sense is that this market starts to move quite quickly. We’re at a tipping point right now.” To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette Photo courtesy of Guild Living