‘There is a risk that the new ‘growth’ or ‘renewal’ areas would serve as a barrier to new retirement communities and would be overlooked in favour of traditional development.’
Bayliss is a little blunter. ‘The policy landscape is unhelpful to our sector, and we’re growing not because but in spite of government policy,’ he says. The National Planning Policy Framework makes no reference to demographics or to elderly housing. At a local level, some local councils do not see elderly housing as an issue at all: They literally do not want it.
The second problem is about the way senior housing is sold and answering it could also help overcome the policy problem. The issue here is that the retirement homes sales process has picked up an unfortunate taint: slightly high pressured, involving high up-front costs, an illiquid asset that may or may not be easy to sell on, and then a bet (which isn’t always fulfilled) that the management company will deliver the promised amenities.
Bayliss does not mention any of these well-known problems, but he does suggest a solution which has been proven to clear the air – and stimulate the market.
‘I’m looking at examples like the Australian legislation. The UK doesn’t need to copy it, there are other approaches, but they passed a specific Retirement Communities Act which made sure operators delivered on their promises, gave consumers some protection and regulated the sector. That created a big bang in the market because it gave investors a solid legal framework on which to invest, and the sector is in need of that here,’ Bayliss says.
A new regulatory framework could (and should, says Bayliss) be combined with a new approach to selling senior living.
‘Suppose you were buying a car, and you were told the dealer only accepted cash and everything had to be paid upfront, you’d think that was out of date, because you know there are other financial solutions,’ says Bayliss, with a hint of despair at the upselling models of some in the senior living world. ‘Maybe we could defer fees, or go for part-buy part-rent? And once you change the way this is done, the consumer starts to think less about the transaction, and more about whether they want this property or not. That is a change I want to make.’
Legal & General has already launched homes to rent to the later living sector through Inspired Villages. It’s a sign of the way the market is moving.
If these policy and transactional issues can be overcome the rate of growth in the senior living sector could accelerate. For now, this is a slow burn. But there is little doubt that before the decade is out it will be a major component of the housing market.