Retirement Housing – A Game Changer.

This post follows on from my previous post and builds on the many comments I have had on this and earlier posts on the subject of Retirement Housing.   (You can find them all in the Topics List under the “Retirement Housing” heading)

A radically different approach is needed, which will require the post-war baby boomer generation of children to accept that their parents aspiration of free health care and decent housing for everyone is only possible if they use the wealth they have fortuitously accumulated in their houses as property prices have risen.    The legacy they had hoped to pass onto their children and grand-children must first be called on to pay for their own health.    The added years of increased longevity  requires much more money than most have saved in their pensions.

The two big uncertainties older people face are about their health and their wealth.    Will they need more support/ health care as they grow older and put bluntly –  will their money run out  before they die?    The problem is that nobody knows.

“Head in the sand” is the most common individual reaction.   Most people hope to die a sudden death, but the evidence is that only 10% do.   The majority have a period of chronic illness before they die.   Long term  health care could be the answer, but it is expensive and people are reluctant to pay for an uncertain risk.

“Head in the sand” is also the Governments’ response, as all politicians are reluctant to honestly tell older people they are going to have to pay for their own care in later life.   Meanwhile, pressure continues to build up on the NHS and Social Services and the quality of care reduces.  Around this a blame culture developes and nobody looks for strategic solutions.

The answer is buried in the equity most older people (80%) have tied up in their houses.   The problem is that it is difficult and expensive to unlock.

Equity release has justifiably earned itself a bad name.  It is expensive because of the unpredictability of lifespans and the fluctuations of housing values.   So there needs to be a new, cheaper and more flexible answer to releasing equity in your home.

Retirement housing is in short supply and is holding its value, reinforced by a market where many purchasers are downsizing from larger more valuable houses and consequently are not so price sensitive  when buying a smaller home.   The market is primarily driven by quality of accommodation and lifestyle.    There is no point in moving unless your new home offers a better life.   Down-sizing on its own is only part of the answer — it solves wealth but not health.

Some people will have  money left  after down-sizing but for others they may need to continue to release more equity  to pay for health care and support.   Many people will have lived in lower value homes which only allow for part purchase of a new retirement home.   In both cases flexible shared ownership housing and the ability to continue to sell back further shares over time is an answer.

Traditionally shared ownership allows young people to  get a step on the housing ladder and then buy additional shares until they own their new home outright.     We need to completely reverse that thinking for retirement housing and allow older people to gradually release their equity share if they need resources to pay for care.

Retirement housing provided by charitable Housing Associations, which has a significant element of shared-ownership can appeal to a lot of asset rich and income poor older people.    Add to this the option of stair-casing down to release funds for health care  and you have facilitated the answers to future health and wealth.

This is not new thinking just a new mindset.   The caveat is that it must be simple and easy to do – no conveyance lawyers, just an open and transparent exchange of letters providing a release of capital  in exchange for shares given back to the Housing Association, underwritten by a charge on the property.

Governments won’t do it, because they do not think holistically about housing and health, nor are they prepared to face up to the truth about who pays for the cost of health care for older people.    Only forward thinking Housing Associations prepared to break the moulds of past housing models can create new opportunities for older people to look after themselves in later life.

In the latter half of the last century Housing Associations changed the lives of many older people with their provision of sheltered housing.   The question is will they again have the courage and passion to be :-


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4 Responses to Retirement Housing – A Game Changer.

  1. It is time to reflect, consider, and share my thoughts on John’s Blog-Retirement Housing a game changer.
    Collectively my thoughts, I categorize them in the following comments, as I see and understand what they mean to me, and their relevance.
    1 Assets to pass on to children
    2 2Health expenditure
    3 Death and welfare
    4 Property equity
    5 Downsizing
    6 Shared ownership
    7 Charitable Housing associations
    8 Game Changers.
    Initially if one ponders on inheritance tax, and the limits for a couple, being an accumulation of each individuals Tax allowance (Max two persons in a relationship?-IHT). Then with the rich, one may seek the advice of a tax advisor; While a Middle England family, with a single home (Abode-residence), one may depend upon in which part of the UK they reside in: Then selling their home and downsizing, may result in a property asset of modest size, which which they may have an available income/investment for care of some £100K, all within Tax limits-(IHT).
    What partnerships/couples and single persons may have to consider , with possible serious consequences is how they live their personal life with respect to housing; care; and welfare, and again what is the expectancy of life, taking into consideration antipodal evidence and statistics of the government and assurance/insurance-financial industry. Having contemplated the aforementioned, one may have to deny windfalls to ones close family members, with very difficult and emotional choices this may bring?
    A gift is a gift, and one cannot once a gift is bequeathed expect any form of return, financial or other wise? I.e. A gift is given freely without ties_ Yes?

    Health expenditure is not easy to predict for the normally fit and mobile person. Should one review what range of care/residential/nursing homes weekly or annual costs are? Then the budget for the unforeseen, with the available allowances claimable: One may have to budget for HOW LONG? It is emotional and difficult off which I offer no solution. At £35K for a year it is for that person(s), and their families to come to some form of conclusion, which will/may depend upon the house assets and available cash/investment funds.
    Death and welfare: Here I look those rose coloured spectacles. Having had too, or at least look at the prospect of downsizing accommodation and possible health expenditure, one may initially; if in a partnership/couple that have downsized and have to look at welfare. Here the couple/partnership may be happy to provide the minimum of support? Unless known mobility and health ailments prevail? And a reality: Then the decisions may be based not on accommodation/housing assets but realisation of cash/investments to pay for the care/welfare required, or predicted, forecast. Here death becomes a reality not for the eventuality of death, but for life expectancy and costs involved for care and welfare, for the reaming natural life.

    Property equities here is a section with a riddle, and a foreseeable problem, which needs and indeed requires respect and understanding by all parties! Who may be the landlords, (Charities- Housing associations), the resident(s) and the resident’s families? I am not fully aware of the legislation behind Charities that are Housing/Retirement Village associations, and how accommodation-especially equity release is achieved; under current day legislation and practices.

    Downsizing is too some extent the wishes of us all as we reach 75+? Physically unless one can afford, a Gardner, Housekeeper, maintenance and cleaning staff; generally the upkeep of a family hose with its possible problems? Unless one encourages or invites one of the family to reside within a common property: Here again Inheritance tax, welfare costs have to be meticulously examined.

    Shared ownership-John has raised a new look at ‘Stair casing’ equity for the elderly (Of 55+ for maybe the infirmed or less mobile). One will have to watch for equity release in existing and future legislation, to enable the risks to be fully understood. This is especially relevant if solely financed by the private financial sector. Should the Charitable and Housing Associations offer this service, with guarantees to all parties within an agreement framework then this is a possible reasonable and common sense solution for all concerned.
    All the above ruminations are after careful consideration! And that existing government can protect residents savings, before health and welfare befits can be claimed. We cannot all ‘’live off the state’’? Both we our selves and the government need to be willing ‘’game changers’’

    One of the dreams one has as a ‘’game changer’’ is too-Downsize-Spend spare cash (in excess of government benefit limits) Travel and experience the wider world, or protect and encourage family requirements.
    This is a reality, wonderful though it is! However one must face any decision taken and the possible consequences with responsibility of any consequences if the thought processes are frivolous or ill conceived.

  2. davidwfreeman237 says:

    Experiences of life.
    To the above Blogs and that Of John’s earlier Blogs concerning The Organisation ‘’ARCO’’ (Associated Retirement Community Operators- Men in grey suits who may mean well? I Trust and hope so??). This takes me back to my time on the NE Coast and as a seaman, in my younger days.
    Then for the average crewmember, sometimes it could be an officer/petty officer, they were assigned a ship, and in the liner companies they may have spent all their working life as free agents and assigned to that one vessel (Home), and upon reaching retirement age, if they had no assets they may have resided (On the Tyne?) in a large seaman’s hostel named ‘’Simpsons’, as having spent their time at sea all possible connections with their place of birth, were non-existent, and so they were unable to put their name down for a local council old age retirement housing or in later days warden controlled housing.
    In my younger days as a service engineer (1970’s) for the marine industry-offices in London, I would be assigned to a gentleman’s hotel in Blackheath. Here! Life was interesting? The elderly gentlemen of Blackheath who were widowed sought refuge in the hotel: paid weekly, used the room and laundry service, all on a long term agreement 6 months tenancy or longer. The Hotel was run by a family and catered for the business clientele on a short term basis. (The original Hotel was sold-it became the Chinese legation/embassy- Beijing), and the family moved into a lager hotel premises on and facing the Heath.
    With respect to these organisations and benefactors of my earlier life, I read with interest the’ ‘ARCO’’ website and note the variety of members interests, and what they can off today to the persons wishing to retire and possibly downsize, and adopt a newer way of opportunities in retirement at 70+.
    Has life and living changed? Are we Game Changer’s.

  3. Dream on Mac Duff, Memories, of an earlier life?
    I mention above ”Simpsons Hostel” on the Tyne for the seamen: This was provided by the Burghermiesters of Newcastle, for the seagoing community. Basically provided to house in the days before air transport, whole crews of a ship while it was fitting out after an annual drydock, or launching ceremony. The crews could be of many foreign flag (nationalities).
    There was another UK wide Merchant navy accommodation provider for officers and Petty officers, which was the chain of ”Merchant Navy Hotels” located in all the major British Ports. I was first aware of these as an apprentice in Middlesbrough- Every Friday night I and fellow apprentices would descend on the MN Hotel, play pool and snooker and generally relax at the ripe age of pre 18.
    We were not encouraged to buy alcohol? Provided we were not drunk, did not buy spirits, the staff under the watchful eye of the manager would be our guardians- This lasted for the whole 2 years of our college attendance. Later in life some 20 years later I was in London, still attached to the Merchant Navy (MN), I stayed for a couple of nights in the London MN Hotel in Lancaster Gate-Next to the FA Headquarters as it was then!. There to my surprise and pleasure I met the manager? Who was no other than the then Manager of my apprenticeships days in Middlesbrough:: We chatted like old hens!!!!
    When I reflect on what one must contemplate what I have had to consider with my lot in retirement I am grateful to our forefathers and gentlemen in grey suits who had or still have vision.
    In my day in the MN one had the seaman’s missions worldwide in most ports that |British ships visited: they were the Stella Maris (Run by the catholic church)-Mission to seamen (Run by the Anglican Church), and for the fishermen the Deep Sea Mission to seamen, run by the church and sponsored by the Deepsea Fishing Industry. These mission were not of ill repute, all though many a bawdy tale exists, they provided welfare/advice/guidance and comfort to the seaman while in port, and often the starting point before decending upon the ‘Fleahpots’ of that Port.
    If one looks and keeps a weather eye open there maybe some one some where out there with your interests at heart. Like the cigarette advent ” Your never alone with a STRAND-(The fag of the day).”

  4. A retirement village: What is it? How is it portrayed? Is it a vision? Or a dream through those rose coloured spectacles?
    A concept of various social groups; of mixed health and mobility issues and varying age groups; such that everyone may volunteer or wish to join in-in various leisure pastimes and physical activities, and make and encourage all concerned realise’ that life is for living!’
    That’s the vision: However with the onset of the advancing population of the UK: Do our political masters and the investment industry see a differing picture? VIZ:
    For the elderly to dream, they require all the above concepts, but are only offered the opportunities, when they maybe within the last 10 years of a statistical life span? This may advantage the developer-Quick turn over of property with maybe the added advantage of an escalating property market- (if the original property at purchase is the only value declared at the time of death.) The disappointing view here expressed is that the old or elderly become a ‘Factory of Wealth’ for the investor, and not a social calculation? The social questions together with welfare become blinded by Death! Within a statistical time span. We as a society are no further forward than residential/ retirement and nursing homes of the post WWII years up to the current date.
    We need to live reality and kick the social conscious of today’s society into the concepts of ‘A MODEL RETIREMENT VILLAGE’, and encourage the older generation to live with a future and at least a number of ‘Golden Years’. Do we not?

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