Granny stacking is a much better concept than the ugly phrase implies. Loneliness is a scourge. Elderly folk often live in unsuitable homes they struggle to maintain. There is a case for packing together apartments with “age-friendly” facilities. That is the approach taken by Guild Living, the “later living” venture launched by insurer Legal & General. It plans to build more than 3,000 urban new homes over five years, to sell for some £2bn.
The plan fits L&G boss Nigel Wilson’s rhetoric around inclusive capitalism. Addressing the housing shortage should be profitable as well as having social purpose. The number of over 85 year olds is set to double by 2041. Already there is a shortfall of homes for nearly 500,000 retired households. Providing more would free up bigger houses, as well as improving living conditions. Health service costs should also fall, research suggests.
Doubters might query the social value. Retirement housing has had some stick, thanks to poor resale values and hefty “event fees” on disposals and subletting. They might also worry about the profits. Retirement housebuilder McCarthy & Stone saw a slump in orders, amid purchasers’ reluctance to downsize.
These are surmountable problems. The slowdown in the housing market has been a brake on the market, but will not last for ever. L&G will be transparent about fees. As well as the £5,000 or so of annual service fees, it will get a 10-15 per cent “deferred management fee” when the occupant dies. That will provide a sustainable income stream. It also aligns its interests with residents in maintaining the property’s value. Even so, buying property — and paying stamp duty — does not always make sense. Build-to-rent might prove a better model.
Persuading people to say goodbye to beloved family homes will not get easier. But other countries’ experience show that retirement communities can work. As a long-term investor, L&G has a chance to get this right.
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