Social housing and retirement villages
By Janet Brown, Head and Heart Ltd
Photo - The Masonic Trust's new village development in Wainuiomata, Lower Hutt, where 5% of the units are affordable rentals.
"The next housing crisis will be about how to accommodate the growing number of over 65s with only superannuation and little or no capital." That's Warick Dunn's view, and he should know. Chief Executive of The Masonic Villages Trust and Aged Care Association board member, Warick knows the retirement village and aged care sector inside out. The Masonic Trust has been providing social housing for over sixty years, and it's getting harder to make the sums add up. Warick reminds me that the Trust's original social housing for older people came into being supported by Housing Corporation loans, and the firm conviction of the religious and welfare sector that there was a need for housing for the elderly. Those initial units were one bedroom and relatively modest, and in recent years older people expect more, which is one factor driving the development of retirement villages by charitable trusts.
Pat Waite at Enliven tells a similar story. Enliven's story starts in 1912, when Presbyterian Social Services was established. Their original mission was driven by addressing the needs of two vulnerable groups: orphans and the elderly. This gradually morphed into rest homes and care, and more recently there's been growing recognition that older people need safe, secure housing, so Enliven now has more than 70+ rental properties as part of its care facilities. During the 1990s Enliven began to add retirement village units to its suite of options for older people. It now has about 900 beds in aged care.
Asked whether there is any stigma or hierarchy between retirement village unit residents and rental residents in Enliven villages, Pat shakes his head. In Enliven's case, intending retirement village residents are buying into facilities which have pre-existing rentals and rest homes, so a pattern of cheerful coexistence is well established. In fact, in one Enliven facility, retirement village residents asked if they could use the rest home lounge for social events.
Like most managers in the religious and welfare sector, Pat says, "we may be thought of as 'not-for-profit' but we're certainly not for loss either, so we have to develop income streams to fund our charitable work, and retirement living options help achieve this for us. Our purpose is still to provide for those in the community who need support, plus retirement village living is a conduit to care." Adding the LTO retirement village option to their rental model made sense, but he notes "We've been a landlord for a long time. First we operated rest homes, then we added rentals, and more recently we've branched out into retirement villages."
Like the Masonic Trust, The Selwyn Foundation in Auckland had its origin some sixty-seven years ago, when the Auckland City Missioner noticed a number of older people living in basic, squalid conditions, and set about establishing dedicated housing for the elderly. The Missioner recruited the support of Sir Robert Kerridge (Director of Kerridge Odeon cinemas) to help fundraise for the development of Selwyn Village. Sir Robert funded a documentary which screened before feature films in his cinemas, helping to raise two million dollars to establish the initial purpose-built bedsits for the elderly, followed by a care facility and then further rentals. Jason More of The Selwyn Foundation notes that social housing is effectively cross-subsidised from Selwyn's retirement village returns, augmented by some bequests and donations. Jason stresses how difficult it is to make social housing affordable for providers, as well as renters: "The difficulty is that our demographic have a limited weekly income and can't afford much in the way of rent, so you can't develop a 'rent-to-own' or hybrid model."
In terms of social housing, The Selwyn Foundation currently has 21 dedicated rental units at Coughlan Court in Selwyn Village, as well as over 70 additional rental units rented at differing levels, up to full market rates, pepper-potted across all their sites. Jason notes that, if Selwyn were to charge full Auckland market rentals at Coughlan Court, residents would be paying $10,000 extra per annum. So, in effect, the rents at Coughlan Court are subsidised by $210,000 per year, funded largely through retirement village returns. Selwyn also operates Selwyn House in Birkenhead, built and operated based on the Abbeyfield model to provide supported shared accommodation.
The Selwyn Foundation has recently acquired some unique insights into social housing provision from its joint venture with the Auckland Council, Haumaru Housing. In 2017 the joint venture took over the Auckland Council's rental portfolio complete with tenants. Over time, as tenants have moved out, units have been relet to people from the social housing register. Jason notes that there is crossover support from the Selwyn Foundation: not just back office functions and executive support, such as IT, HR, payroll, marketing and communications and property expertise, but also additional services to Haumaru tenants. These services include van trips and outings, resilience/wellbeing checks by a qualified nurse for tenants returning from hospital, attendance at Selwyn Centres, as well as providing tenants with access to Selwyn Strength and Wellness Studios located in Selwyn retirement villages.
All three operators agree on the challenges of funding maintenance and development. Warick explains The Masonic Trust's approach to funding: "For us it's been critical to have sufficient reliable cash flow to allow us to borrow, plus low interest rates have helped recently. Otherwise it's hard to fund replacement and upgrading of older residential and care facilities. Our strong village financial profile basically allows to do our refurbishments. Care is extremely difficult and challenging to finance." The Masonic Trust has found that local authorities are generally sympathetic and supportive through the consenting process, but the process itself is onerous in terms of compliance, especially in regard to potential infrastructure load in some instances.
Enliven also maintains an open and innovative mindset about developing alternative income streams. As well as establishing retirement villages, Enliven has also developed an online shop selling products for over-65s (shopenliven.co.nz) and is in the process of establishing a nursing training academy and consulting business.
Land for new developments has become available at times through people donating land or it being acquired on the open market. Enliven is currently focused on building new developments in areas where there is already high demand for housing options, and is open to a variety of partnership options. It is also in the process of becoming registered with HUD as a social housing provider, and is considering the possibility of multi-generational housing developments. Pat argues that housing options such as those offered by Enliven help provide a useful solution to New Zealand's housing shortage, free up housing for younger people, and improve outcomes for older people.
Warick observes that most social housing providers are primarily focusing on younger age groups and families. The Masonic Trust has chosen not to register at present, noting the heavy compliance and reporting requirements entailed. He notes that, for the older demographic, mobility and access is important: "People are now coming into our villages older, so design is crucial, as are aspects like double-glazing. Our facilities are now warmer and healthier than the housing our residents have come from because of improved design. We invest in high quality building materials and long-term design." Warick is also interested in pursuing partnership options that might break down the silos he sees at operational/capital levels. He sees some potential, given the strength of current regulatory settings, for arrangements where residents might provide some limited capital, with the weekly service charge becoming a form of rental, but recognises, like Jason, that residents' limited weekly incomes make this problematic.
All three operators agree that financing long-term maintenance and replacing older housing stock is an ongoing challenge. Jason says that the partnership has been critical to making the Haumaru venture, with 1,452 units under management, work: "Acquiring the Haumaru portfolio at peppercorn rental was crucial. I don't believe any operator can afford to develop major social housing provision without partnering with central or local government or a significant benefactor." He and Warick both believe that, without Government recognition of, and a coordinated, intentional response to the issue of affordable safe and secure housing for older people, operators are unlikely to be able to afford innovative solutions in sufficient scale to make an appreciable difference.