Risk and Reward in the Retirement Living Sector

Jeremy Bark Associate Director, Bryan Cave Leighton Paisner LLP
Jane Ashcroft CEO, Anchor Hanover Group
Keith Crockett Director of Corporate Development, Avery Healthcare Group
Bhavna Keane Rao Founder, BKR Care Consultancy
Dan Conaghan CEO, Conaghan & Company
Jeremy Bark, Bryan Cave Leighton Paisner LLP

This summer’s Care Conversation event was a panel discussion on the theme of ‘risk and reward in the retirement living sector’

1600 - 1630
Arrival and Registration
1630 - 1730
1730 - 1800
Drinks and Networking

“It goes without saying that the UK has an increasingly aging demographic,” panel chair Jeremy Bark of Bryan Cave Leighton Paisner told Care Conversation delegates. “The population is getting older and so the issue of how we service those care needs will come into ever sharper focus as the years go by.”

While there would always be a role for the traditional care home sector the government was increasingly looking at other models, including a focus on independent and supported living, he said, something that was likely to be a theme of the long-awaited social care green paper.

“It’s a great time for investors to be moving into this space,” said Dan Conaghan of Conaghan & Company. “A lot of the hard work and heavy lifting has already happened over the last five to seven years.” In terms of funding, banks had noticeably warmed towards the sector, he said, while more sites were becoming available and customers were increasingly familiar with new business models. “We can talk all day long about mixed tenures and different operators, but what really matters is the right care at the right time of life,” with the lines between retirement villages and care homes becoming increasingly blurred.

Investors typically looked at penetration rates and in the UK these were markedly lower than in markets such as the US, Canada or Australia, said Keith Crockett of the Avery Healthcare Group. “So it’s a good time to invest. One of the interesting things is that area where independent living and care overlap, particularly from a regulatory standpoint. The reality is that it’s still a very nascent business.”

Retirement villages tended to work well when “you iron out what you’re doing, where you’re doing it and why you’re doing it”, Bhavna Keane Rao of BKR Care Consultancy told the seminar. In terms of regulation there were a number of inconsistent approaches, with the traditional care model no longer fitting “the way things are moving” and regulation failing to keep pace with changes in the market. “I think we’ll see more issues there,” she said.

A key issue was the need for CQC guidance documents to be updated, she stressed. “The role of the regulator has changed, but the legislation hasn’t changed.”

This blurring of some of the boundaries had also led to planning challenges, explained Tim Smith of Bryan Cave Leighton Paisner. “Believe it or not, the planning system isn’t very agile. It hasn’t kept pace with the way assisted living, retirement living and care is provided.”

One challenge was the sheer variety of terminology used, and a key driver for the sector was understanding what consumers were looking for, said Jane Ashcroft of Anchor Hanover Group. “For us, in many cases the consumer is the local authority looking to commission services,” while for retirement villages buyers were interested in issues like design, outside space and resale value. Although the increasing overlap between different models was in many ways ideal for the consumer, the challenge was how this would fit with planning and regulatory models, she said. “It’s really about clarity in terms of what you’re offering,” added Bhavna Keane Rao

One of the definitions of success in this growing sector would inevitably be the ability to attract and retain high quality staff in a competitive market, said Jane Ashcroft. “A good retirement village manager will need a very wide skill-set.”

While retirement villages were still a relatively new concept in the UK, the well-established US market now saw people moving into them at a younger age, said Bhavna Keane Rao. “There’s a lot more energy, lots of things going on. In this country it’s still very much a medical model. We haven’t quite got there, and we’ll need to sit down with regulators and tease these issues out.”

When it came to long-term forecasts for the retirement living sector, there were still significant challenges, said Keith Crockett. “Even if you wanted to double the size of retirement living, you’ve got to find the site, get planning, build it and then fill it. So even with the rate of interest from investment groups – of which there is a lot – it will still take time. Customer awareness of this product is still low in the UK because we don’t have those examples of family members moving in, there isn’t really an understanding. So the reality is that it will be 10-20 years before you have a much more mature market here.”

“I think it’s interesting how the worlds of housing and care are increasingly coming together, although that will make some of those regulatory issues more complicated,” said Jane Ashcroft. “But this is a sector that can generate investment and jobs and opportunities and free up family homes. Getting this right has so many positives.” 

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