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 :-