Affordability of retirement housing: resident perspectives Jenny Pannell Association of Retirement Housing Managers Annual Conference 19 th June 2013 Imogen Blood & Associates

Affordability of retirement housing: resident perspectives How important is affordability? 3 stages: deciding to move in, affording to stay, moving on/exit arrangements What does it cost? How do people meet the costs? Who can afford to live in retirement housing? Managing uncertainties: what can providers do to help prospective and future residents? Note: We are not looking at planning/design issues

A Better Life programme Older people with high support needs Voices of older people Quality of life Value for money from resident perspective

Overview of the research 3 UK-wide, cross-sector qualitative HWC studies Evidence review 2 quantitative studies with New Policy Institute Whose responsibility? Affordability for self-funders Supportive communities Affordability of retirement housing Older people’s housing: choice, quality of life & under-occupation Supported housing for older people in UK Practice examples Affordability Guide

Why does affordability matter to providers and commissioners? “We do know that some people are concerned about running out of money once moving into a scheme; although this is a difficult issue we have tried to position our service charges in such a way that they remain affordable if a person becomes eligible for welfare benefits, however this does vary between schemes”. (National retirement/assisted living private provider) “We have a particular concern about the ‘nearly poor’ i.e. those older people who are just above the benefits threshold but have limited income even if they are (modest) home owners. Rising costs may mean that this group are either priced out if they are not eligible for any benefits or they simply see extra-care as an option that they can’t afford”. (English county council social care commissioner)

Resident perspectives: Can we afford to move in?

Will I be able to afford to stay here comfortably …even as things change ?

Can I stay here to the end of my life? Will I have to move on …?

What leaseholder residents told us about affordability “I realised that the choice for me was to carry on living in my bungalow with carers visiting but with life being a struggle, or moving here to a nice flat with no upkeep worries, with staff available and with a social life; but I know that I’m fortunate because I am in a position to be able to afford to make that choice”. “I worked out that the costs of running and maintaining my old house were pretty much the same as the service charge for living here in a brand new flat with all the facilities and none of the upkeep”.

What social tenants told us about affordability “When we decided to take it … a couple of ladies from the council came to see me and we decided that I could just about afford it. The rent is high here, and care is very expensive if you have to pay it all – I couldn’t do it. It’s £27 a week more here than the rent in my council bungalow”. “For me it was a shock having to pay extra – having a service charge – and it has gone up from £4 a week to £10 a week. I knew about the basic rent – that was about 10% more than with the council. It goes up more too – it was £34, now it’s £64.”

The affordability ‘maze’…

Difficult for older people, relatives and advice agencies to understand/ explain the complexity of costs in retirement housing… especially in housing with care/extra care/assisted living models (with higher costs)… and in leasehold housing (most owner-occupiers will have lived in a freehold house, not an apartment, so not familiar with service charges, exit fees etc). Accessing welfare benefits and state help can be crucial for self-funders (even the better-off) – especially if costs rise faster than incomes, care needs increase, savings start to run out …

Costs in sheltered and retirement housing Housing costs: Owner-occupiers: purchase price &/or mortgage, service charges; maybe sinking fund (major repairs), exit charges Social tenants: rent, service charges Shared owners: mix of above Private tenants: rent usually includes service charge AND Housing-related support costs (eg scheme manager, community alarm service: may not be called this in private schemes, or in HWC eg “well-being charge”) AND MAYBE Care costs

££££ Meeting the costs ££££ State, occupational, private pensions? Earnings? Drawing on savings (interest, capital)? Equity release (at time of purchase/later)? Financial help from family (purchase price/on-going)? Claiming benefits/state help: Differences between working-age and pensioner benefits Mixed-age pensioner couples Means-tested benefits? Pension Credit (and premiums), Housing Benefit, bedroom tax, council tax Disability benefits? Attendance Allowance? DLA/PIP? Help with support and care costs?

The role of benefits advice “I worked hard every day from the age of 15 and I have never claimed anything extra in my life … to be honest, I always felt embarrassed by the thought of asking. Our advisor was very caring and understanding, and explained the benefits system in clear and simple terms. … I was eligible for quite a sizable contribution towards my Council Tax costs. I recommend anyone unsure of their finances to speak to the McCarthy & Stone Benefits Advisor for advice.” “I got a phone call from the benefits advisor one day and he advised me there were probably benefits that I would be eligible for… after a chat, I was sent some forms to fill in, and I soon discovered I was entitled to Guaranteed Pension Credit and Council Tax Benefit - I couldn’t believe it! His advice has made such a huge difference to my retirement. I now have no money worries …” Source: McCarthy & Stone website: Money: Free benefits advice: Benefits Advice Testimonials

The escalator effect

Who can afford retirement and sheltered housing? Renting retirement housing (social tenants): 90% of pensioner households would get some help with housing costs; their residual income would Guarantee Credit level as the ‘floor’ (£145/£222 per week for single person/couple, April 2013) Buying retirement housing: 95% of owner-occupier pensioner households have over £75k equity (average UK price of re-sale 1-bed retirement flat); a third would get some help from welfare benefits for service charges BUT … …there are TRAPDOORS in the floor …

Trapdoors in the income ‘floor’ Trapdoors mean that people’s income can fall below the Guarantee Credit minimum income ‘floor’ (£145/£222 per week) because of getting no help with some of their fixed (non-discretionary) costs: Ineligible housing costs: especially service charges for leaseholders, potential problems for private tenants (Local Housing Allowance limits/bedroom restriction), and effect of bedroom tax for social tenants under pension age No entitlement to help with housing-related support costs, especially for leaseholders and private tenants (Supporting People funding eg for scheme manager, community alarm, 24/7 staff in extra care models): Care costs (especially in England if over the capital limit)

So who may find retirement housing more - or less - affordable? More certainty about affordability: low-income pensioner households in social rented housing Less affordable? Maybe for: Leaseholders (especially accessing/remaining in more expensive housing with care) unless high incomes/ savings/ housing equity Anyone under state pension age (incl. mixed-age couples) unless high incomes/savings, because working-age benefits much lower Single people (especially women: often no or low occupational pension/savings, have often been carers) Residents who move in (with higher income) as a couple and then partner dies (especially if the carer dies) Couples where one partner needs a care or nursing home and the other still has the costs of retirement housing/housing with care

What can providers do to help manage uncertainties about affordability? Resident and family uncertainties: Can I/we afford to move in? Do we understand the costs? Can I/we afford to stay here? What happens if personal circumstances/ income/ savings change (eg lower interest rates, increased care needs, widowhood …)? Is there help available through means-tested &/or disability benefits? How do we find out about this? Will the scheme remain affordable? Will costs increase more than income? Will facilities/services stay the same (eg on-site restaurant; access to care; 24/7 staffing)? Can I/we stay to end of life? Can we (or family) sell (or let) if we need to? What can providers do to help manage these uncertainties?

What can providers do to help manage uncertainties about affordability? What is the role of providers? “Hands-off” or interventionist? Is it different for owner-occupiers, for social/ private tenants? If so, why? How clear is the information provided to help people understand the affordability of living in retirement housing (at the outset/ on-going)? What about Right to Manage? Does this affect affordability? What about shared ownership and private/market renting? Do these options make retirement housing more affordable for some people? What about welfare benefits – who should provide advice? Is equity release the solution to affordability? Can residents access equity if they need it to fund on-going costs? Are provider and local authority commissioner interests in affordability mutually exclusive? How can older people (or their families) exit if they need to?

Resources Pannell, J., Blood, I. & Copeman, I. (2012) Affordability, Choices and Quality of Life in Housing with Care, Joseph Rowntree Foundation Copeman, I. & Pannell, J. (2012) Can self-funders afford housing with care? A guide for providers and commissioners, Housing LIN Blood, I., Pannell, J. & Copeman, I. (2012) Findings from Housing with Care Research, Practice Examples, Joseph Rowntree Foundation Blood, I., Pannell, J. & Copeman, I. (2012) Whose responsibility? Boundaries of Roles and Responsibilities in Housing with Care, Joseph Rowntree Foundation Aldridge, H., Kenway, P. & Pannell, J. (2012) Who can afford retirement housing? JRF/ New Policy Institute