“Supported Housing is designed to ensure that residents can live as independently as possible within their communities while receiving care and support”
“Medical advances are helping to increase the life expectancy of those with care needs. At the same time, the government has committed to transforming the provision of care”
“There is an opportunity for a new approach that issues leases, with appropriate breaks, on terms that align both providers and meet the Regulator’s requirements”
If you’re unsure exactly what Supported Housing is, how it works and why it’s in need of investment, then this is the place to start.
The provision of specialised accommodation in the UK varies widely – from emergency hostels and temporary homes to sheltered living and long-term care. Often the operating models are substantively different.
Here we explore the Supported Housing market and how it has developed, as well as the arguments for contributing to a newer, more sustainable approach.
What is Supported Housing?
Supported Housing is specialised accommodation offered to individuals who need a level of care, support, or supervision beyond what they might receive through traditional general-needs social housing (such as council homes or housing association properties). It is designed to ensure that residents can live as independently as possible within their communities while receiving care and support.
In practice, Supported Housing takes a variety of forms:
Temporary accommodation: offered to adults – including the homeless, victims of domestic abuse and ex-offenders – in need of support within their community.
Accommodation specifically for young people aged 16–25: as well as tailored care, some educational assistance might be provided.
Specialised Supported Housing: offered to adults aged 18–25 with various care needs; here, homes might be adapted to suit people’s specific requirements – wheelchair access, for example – and varying levels of care are provided on site.
Extra-care housing: provided to adults aged 55+ in need of care and support; these homes tend to be flats offering communal facilities, or to be similar to retirement villages facilitating supported living rather than end-of-life care.
Single-service housing: offered to adults with more complex needs; homes might be specifically adapted for individual residents and will aim to provide long-term, possibly life-long, care.
How it works
Local authorities have an obligation to house people in need. They work with Registered Providers of accommodation and Care Providers to provide homes and appropriate care.
Registered Providers, which claim rents on behalf of residents, receive their payments through housing benefit, which is effectively paid by central government and is exempt from caps on Local Housing Allowance. Local authorities agree a care package with the Care Provider.
Both providers are regulated in order to ensure quality of care and value for money.
Why more is needed
Demand for Supported Housing is rising for several reasons. Medical advances are helping to increase the life expectancy of those with care needs. At the same time, the government has committed to transforming the provision of care to enable people to remain living in their communities for longer, rather than go into hospital or a long-term care institution.
According to the London School of Economics, between 2015 and 2030, an additional 30,000 Supporting Housing units will be needed.
Where it’s gone wrong
To date, most private capital has been invested in Supported Housing through the issuance of long (20–25 year) leases to Registered Providers with no break clauses. Typically, care packages last for between five and ten years, leading to a mismatch between the liabilities of the two providers.
In 2018, the Regulator of Social Housing outlined its concerns about long leases as well as the poor governance and financial strength of Registered Providers exclusively using long lease terms.
Some Registered Providers develop properties using their own capital. However, the extent of demand means there is a role for private capital to provide further lease-based accommodation.
There is an opportunity for a new approach that issues leases, with appropriate breaks, on terms that align both providers and meet the Regulator’s requirements. Avoiding Registered Providers with weak capital positions and poor governance, as well as poorly regarded Care Providers, should reduce financial risks.
Setting fair rents, benchmarked against the private market, would help ensure that the accommodation offers value for money.
Indexing annual rent rises to inflation, in line with government policy, would help to provide investors with a reliable income stream.
This new model should create benefits for all stakeholders, including generating returns for investors and contributing to positive changes in people’s lives.
The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.
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