Shifting the mindset on retirement living

The government is failing to address the extensive under-supply of retirement living options in the UK. Around 20% of the UK population will be over 65 by 2025, but with as few as 5,500 retirement units a year being built on average since 2000, the UK’s retirement living stock is falling further behind. The rate of delivery is being held back by a planning system that fails to recognise the critical need for retirement living units, and fails to apply proportionate planning conditions to developers. The use class debate The broad range of retirement living models has created difficulty in determining whether developments fall within C2 use class (“residential institution”) or C3 use class (“dwelling house”). As residential institutions are not usually expected to provide affordable housing, local authorities are regularly arguing that retirement living developments fall within C3 use class in order for them to benefit from an affordable housing contribution. This is particularly the case where developments comprise self-contained units and flexible levels of care provision, which do not clearly fall into either use class. The recent appeal concerning a PegasusLife 113-unit assisted living community concluded that, despite the units being self-contained, there was a “clear functional relationship between the residential units and the wider assisted living complex and facilities in this case, which are interdependent on one another” and therefore the scheme fell within the C2 use class. However, other appeals have determined that some developments fall within the C3 use class owing to characteristics such as residents taking a full part in running the household or sharing meals. With the unclear distinction causing delays and a lack of clarity, a suitable definition is required in order to place all retirement living models within the C2 use class. There is need and demand for a broad range of retirement living models, ranging from co-living communities to 24-hour specialist care facilities. These models should all be exempt from affordable housing in order to incentivise developers to offer choice in the market and to build more homes. Community infrastructure levy (CIL) and section 106 contributions The costs associated with a specialist retirement living development are significantly higher than those for conventional development, when taking into account construction costs, CIL and section 106 payments. Requiring onerous section 106 payments for retirement living fails to recognise the benefit that it provides to communities. With nearly 1,000 elderly people needlessly admitted to hospital every day, more retirement living communities are required to take pressure off the NHS and allow older people to have access to specialist care in their own home. Retirement living is often considered an unattractive prospect for local communities despite it freeing up under-occupied homes into the local market, generating roughly one local job per resident, and using land more efficiently than residential developments. These benefits should be offset against the standard section 106 payments to ensure that retirement living developers are not paying disproportionate contributions. CIL liability is charged per square metre on new developments with no exemptions provided for retirement housing, despite the significant space used for non-saleable communal areas and facilities. Retirement living developments have a very different viability profile for CIL and can be disproportionately hit by CIL rates that are not designed for them. Exempting retirement housing from CIL liability or allowing communal spaces to be offset in CIL calculations would therefore enable developments to become more viable. Offsetting the benefit to the local community when considering section 106 obligations would further incentivise developers and increase delivery in the market.      Role of local authorities The rate of delivery is further constrained by the failure of local authorities to allocate for retirement housing in local plans. Despite the National Planning Practice Guidance identifying retirement housing as being in “critical” need, less than 10% of local authorities have both an elderly person’s housing planning policy and allocated sites for retirement housing, while nearly two-thirds have no elderly accommodation policy or site allocation at all. Local authorities must make a proactive effort to examine their retirement housing needs and allocate sites accordingly. However, some local authorities are reluctant to allocate sites owing to the increased pressure they believe they would place on their social care budgets. Without social care budgets being drastically increased, local authorities will continue to resist retirement living developments. This concern is misplaced; studies show that people in care homes need less medical support than those not receiving specialist care. Market failures The retirement living sector is failing to meet the target market’s needs and desires. At present, the UK has 141,000 units of owner-occupied retirement housing while around 3.5m people over the age of 60 have expressed interest in buying a retirement property. Older people who are used to owning their property want to purchase retirement living units, yet the sector continues to produce a majority of rental units. While older people may be looking to downsize from their large family homes, they are not attracted to the cramped units which make up the majority of the retirement market. Retirement villages are ideal for older people who do not require regular care but would like to move into a more suitable sized home which still offers plenty of space. There are currently only 20,000 people living in them in the UK. The future for retirement living The planning system must be reformed in order to remove the obstacles facing the retirement living sector. Categorising all retirement living as C2 use class, reducing CIL liability for non-saleable areas and encouraging section 106 payments to be proportionately applied will provide clarity at the outset for retirement living developers. However, local authorities must also allocate sites in their local plans in order to increase the retirement living units in their district. Our ageing population is not going away. We need to plan for it appropriately – and now.  Megan Forbes is a solicitor in the planning team at Irwin Mitchell ©Blend Images/REX/Shutterstock