The problems faced by generation rent and first time buyers dominate the housing headlines, but there is another element to the housing crisis which gets less attention. The supply of housing for older people is not keeping up with a changing demographic.
Age UK estimate that by 2030 over 20% of the UK population will be aged over 65 (1). Many older people will chose to remain in their own homes, but specialist retirement housing has an important role to play, and with on-site facilities and a ready -made community, it can assist people to remain independent for longer. Each year, only 7,000 new retirement dwellings are built (2), compared with a potential demand for around 30,000 specialist homes (3).
Could an affordable housing alternative, with government backing, help more people access the specialist accommodation they want?
What is OPSO?
Older People’s Shared Ownership (“OPSO”) is a specialist category of shared ownership for over 55s.
Shared ownership is a type of affordable home ownership, sometimes also described as part-rent, part-buy. A purchaser buys a share of a home and pays rent on the share retained by the landlord, frequently a housing association.
Shared ownership is available to those who have a gross household income of less than £80,000 and who are otherwise unable to purchase a suitable property for their housing needs on the open market.
Shared owners can usually “staircase” (buy additional shares in their home) until they own 100%. As shared owners acquire more shares in their home, the rent they pay decreases proportionally.
Shared owners are free to sell their share of their home, subject to complying with restrictions in their lease. If a shared owners wants to sell, their landlord will have a period of up to eight weeks to nominate a purchaser.
Once a shared owner of a house staircases to 100%, then they may acquire the freehold in their house for no additional payment. With shared ownership flats, the lease will remain in place, but any shared ownership specific requirements and restrictions will fall away.
The key differences between mainstream shared ownership and OPSO are:
- The shared owner must be aged over 55. There is a limited exception where the home is inherited by a younger spouse or civil partner of a deceased shared owner.
- Maximum staircasing is capped at 75%. This means that an OPSO shared owner will never own their home outright and helps to ensure that the home will always remain available as affordable housing.
- Once an OPSO shared owner has staircased to 75%, no rent is payable on the remaining 25%.
- The shared ownership lease must make provision for access to person centered services to support individuals, such as a resident warden or other service for obtaining emergency assistance.
What are the challenges with OPSO?
There are challenges for housing associations in developing new OPSO schemes, primarily around finance and viability, and most schemes will not get out of the ground without significant grant funding or other public sector assistance.
It is encouraging that the government has acknowledged the need for more solutions for older people’s housing in its 2022 Levelling Up White Paper, and the latest Affordable Housing Programme has a renewed focus on grant funded OPSO. This may mean that we will see more specialist schemes being brought forward in the near future.
For buyers, OPSO will not be available to everyone. A buyer will still need to fund the purchase of their initial share in the home (from 25% of the market value, but this figure will reduce to 10% on new grant funded schemes) and there are additional costs to take into account in assessing affordability.
As well as rent and mortgage payments (if applicable), the shared owner will often have to pay a service charge, and a wellbeing charge for the person centred services, as well as additional costs for extra services such as meals and individual care costs. It is important that buyers go into OPSO with full knowledge of the ongoing charges and the understanding that these will increase over time.
The service charge covers the cost of shared facilities within the scheme, such as building and grounds maintenance, caretaker/concierge, cleaning, lighting and heating of any community rooms and is payable in addition to the rent. There is usually a separate well-being charge that will vary from scheme to scheme, but will cover as a minimum the provision of 24/7 emergency response.
Another concern for buyers, common to private retirement housing, is whether it will be difficult to move on to other accommodation if their care requirements increase, or for their family to inherit and sell the home. There are additional restrictions on selling homes in extra care schemes and it may take longer to sell a shared ownership home as shared ownership remains less well understood in the market. Housing associations are encouraged to have clear policies and procedures in place to make the selling process smoother and to help next-of-kin to deal with the property of a deceased shared owner.
Is OPSO the future of retirement living?
Older People’s Shared Ownership has an important role to play in offering a more affordable alternative for people who cannot otherwise afford to buy a retirement home, but developers and buyers need to enter into it with full knowledge of what it involves, and it can only ever be one element of a wider solution to meeting the future housing demands of an aging population.
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- Age UK, Later Life in the United Kingdom (2019).
- Centre for the Study of Financial Innovation, Too Little, Too Late? Housing for an aging population (2000).
- Knight Frank, Residential Research: Retirement Housing (2016).
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