Memorandum from Anchor Trust (CRED 29)
Summary
· The credit crunch will have a significant impact on older homeowners, and on older people who wish to move from private housing into sheltered accommodation; · Older people are already being disproportionately affected by increasing fuel prices, and, according to Age Concern, are most likely to be hit by soaring inflation: nine per cent compared to just over five per cent for non-pensioner households; · Anchor is disappointed that the Department for Communities and Local Government (DCLG) has yet to announce any measures to alleviate the difficult situation in which older people are increasingly find themselves; · The proposed National Clearing House scheme is not suitable for older people's housing needs; · The Tenant Services Authority (TSA) will have a key role to play in regulating the sector and monitoring the financial validity of housing associations during the worsening economic downturn; · Financial products based on part or shared ownership may give older people financial security during the credit crunch, but the quality of products must be improved by housing associations, the Government and the private sector working more closely together.
About Anchor Trust Anchor Trust is the largest
not-for-profit provider of housing, care and support services for older people
in
· Our sheltered housing, Anchor Retirement Housing, provides accommodation for nearly 24,000 older people, at almost 750 schemes across the country; · Guardian Management Services provides housing management services to leaseholders at 6,766 properties at 232 estates; · Our model of extra care housing, Anchor Integrated Care and Housing, has 915 properties across 25 schemes. Each scheme has a 24-hour on-site care team; · Denham · Anchor is developing pilots for new products which will meet the housing and care needs of the more demanding next generation of older people. These are At Home Services (providing service to self payers which will enable them to continue living independently at home); Care Leadership (a new model · Our domiciliary care business, Anchor Care, has 5000 clients; · Anchor Homes provides residential and nursing care to more than 4,000 older people in 102 care homes, with a total of 4,325 places; · Anchor pioneered the concept of home
improvement agencies, and is now the largest sole provider of such services in
Response to Select Committee questions
Topic one: achievement of the Government's house building targets, both for market and for social housing
1. The impact of the current credit crunch is far reaching. Its effect on the housing market has consequences for not only first time buyers and families: it also brings difficulties and dilemmas for older people, both RSL tenants and leaseholders.
2. However, arguments in favour of better specialised housing and improved choice for older people, should not be forgotten as the Government works through the credit crunch;
3. Anchor believes that the Government should continue to strive towards meeting its house building targets, despite the credit crunch. And in particular, it should also work to meet the pledge, set down in Lifetime Homes, Lifetime Neighbourhoods, to improve the supply of specialised, high quality housing for older people;
4. So far, the freezing of the housing market chain and its impact on older people has largely been seen from the perspective of younger homeowners: that is, the inability of older people to move from large homes and downsize to smaller properties is preventing young homeowners, particularly families, from accessing housing which would better suit their needs.
5. Instead, Anchor believes that the issue should be seen from the perspective of older people themselves. Where older people prefer to continue living independently in their own home, they should be able to access the services which will enable them to do so, even if their home is suitable for a family;
6. While supply is a key issue, we do not believe that the DCLG's proposal to buy unsold homes which will then be used as social housing, the National Clearing House system, is the best answer for older people;
7. Anchor is concerned that such housing will not meet the needs of older people. Despite originating in the private sector, such housing, if reclassified as social housing, will not meet Lifetime Homes standards, which will be compulsory by 2011;
8. General needs housing will also be poorly suited to the extra care model, in which Government is currently investing;
9. A more long-term approach to increasing the supply of social housing for older people is needed;
10. Anchor is supportive of general needs developers building specialised housing for older people and increasing supply. However, we call on the Government to encourage them to be more ambitious and visionary in their approach: meeting the changing aspirations of the next generation of older people who will demand high standards of quality, superb design and a choice of tenure and ownership options;
11. A further consequence of the credit crunch is that older people can no longer rely on being able to realise assets held in their property, to pay for their own care or retirement housing;
12. The Government needs to work with the financial sector to develop robust products which do not depend on high proportions of new lending or loan schemes: these might include 'reverse staircasing', part ownership or shared ownership, part ownership or shared ownership;
13. Social housing, in the form of sheltered housing for rent, continues to be a popular choice for older people. It provides tenants with low level support, which plays an important part in prevention and early intervention and can prevent hospital admission or a premature move into residential care;
14. However, with social housing, the issue is not one of supply, but quality. In some areas, there is an over supply of sheltered housing, which is no longer attractive to older people because it is in a poor location, is outmoded and is not in keeping with contemporary standards of design;
15. Anchor would argue that better use of existing stock is a key issue: sheltered housing should be attractive and appealing to future generations of older people, and where it is not, it must be re-modelled or closed;
16. Lifetime Homes, Lifetime Neighbourhoods, recognises the case for re-modelling where appropriate, and identifies the need for further work to consider options around re-modelling;
17. However, re-modelling is an expensive option for housing associations. It is only a viable choice if the DCLG steps in to provide ways in which the expense can be reduced. Although Lifetime Homes, Lifetime Neighbourhoods alludes to this weakness, the Government has yet to set out how the expense of re-modelling for housing associations can be reduced.
Topic two: the financial viability and ongoing business of housing associations
18. Anchor can only realistically speak about its own experience as a housing association negotiating the credit crunch;
19. We are confident of our own financial viability: our reserves are not susceptible to the current stock market crisis because they are held in a protected fund. And, unlike a number of local authorities, we did not have any money in the Icelandic banks;
20. Anchor supports the view of Peter Marsh, the Chief Executive designate of the Tenant Services Authority, who recently told Select Committee members that housing for rent was "a safe haven for investment." As a consequence of the credit crunch, Anchor can acquire more land for less money than we might have done a year ago. We are also in a stronger position than some other registered social landlords because we are not so reliant on property sales;
21. We also want to emphasise that our 2020 vision, which sets out how Anchor will evolve to meet the changing needs of older people, is even more pertinent is the current economic crisis;
22. However, we are fully aware that other housing associations may experience difficulties as a result of the credit crunch;
23. Anchor would certainly not want to see a situation whereby properties built for social rent are sold on the open market because housing associations are extending themselves to the point where they are putting tenants at risk;
24. Housing associations in receipt of public funding have a responsibility to ensure that it is allocated and invested appropriately;
25. We agree with Peter Marsh that "governance and viability in the sector are the bedrocks of good regulation", and Anchor looks to the TSA to provide robust advice to housing associations whose investment and expansion plans may lead to an insolvency situation. We call on the TSA to take a proactive approach to monitoring the financial risk to individual housing associations;
26. Anchor will also expect the TSA to take decisive and robust action which will ensure that tenants' welfare and wellbeing are foremost when housing associations experience difficulty. The TSA will consult on its remit and responsibilities early next year, and Anchor will take part in that consultation to help shape its development.
Point three: measures to help existing and prospective homeowners affected by the credit crunch
27. The credit crunch will have an impact on our customers: it will affect homeowners wanting to move into sheltered housing (currently, 25 per cent of sheltered housing tenants in Anchor Retirement Housing have arrived from the private ownership sector) and make it more difficult for private homeowners to free up equity held in their current property;
28. This poses a challenge for housing associations such as Anchor, which operates both a sheltered housing business, and a leasehold and property management business;
29. Anchor believes that the range of financial products available to older people, most of which are based on releasing equity held in property, should be improved to be able to accommodate the economic slowdown.;
30. The range currently on offer is limited, and older people have been disincentivised by the mis-selling of financial products in the past;
31. Products designed particularly for older people which combine an element of continued home ownership with the partial release of equity in a property, giving older people the security which is often so important to them, may be an option during the credit crunch. Similarly, 'reverse staircasing' in shared ownership products might encourage older people to realise assets held in their property;
32. Lifetime Homes, Lifetime Neighbourhoods states that "Housing associations should aim to provide more creative options to buy or part-own housing." Anchor agrees, and is already working with the private sector to help develop better quality products;
33. Nevertheless, we believe that the responsibility for developing financial products for older people should be shared: between the private sector, housing associations, regulators and the DCLG. The DCLG is in an excellent position to give the lead;
34. However, the department has not as yet announced measures to assist older homeowners or prospective older homeowners during the credit crunch. Anchor would urge the DCLG to address the issue as a matter of urgency.
Conclusions
· Housing and the credit crunch should not just been from the perspective of families and first time buyers: the concerns of older people must be taken into consideration and viewed as equally valid; · The National Clearing House system is not suitable for older people; · The TSA will have an important part of play in regulating the sector and ensuring the financial viability of housing associations; · Financial products based on part or shared ownership may give older people financial security during the credit crunch, but the quality of products must be improved by housing associations, the Government and the private sector working more closely together.
November 2008 |