Britain’s leasehold system is on course for large-scale reform, a move that few outside the property industry are likely to begrudge given the cladding crisis and ground rent scandal.

Phil Bayliss

But the transition to becoming a nation of ‘commonholders’ will likely be fraught with red tape and legal challenges. Leasehold reform will need to be carefully thought out, so as not to dent large-scale landowners’ appetite to build, as we look to tackle the chronic undersupply of housing.

For the later-living sector, there has already been disappointment from some that MHCLG was backtracking with regard to exempting retirement communities from the zero rating of ground rents reform. Inevitably, some argued, such a move would only result in higher prices for residents while also discouraging investment in creating new senior housing. However, a modernised ownership model and leasehold reform creates opportunities.

As other countries have demonstrated, it is possible to have a thriving later-living sector without leasehold or ground rents.

In New Zealand, for instance, where 5% of retirees have access to housing-with-care settings, compared with just 0.8% in the UK, retirees secure their homes under a Right to Occupy. This alternative tenure arrangement works whereby the retiree purchases the right to live in the unit for as long as they choose, while an outgoing fee – usually paid monthly – entitles them to communal facilities, services and other amenities offered by the retirement village. This delivers increased transparency and reassurance to the buyer that there are no hidden fees.

Old people

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Securing a home through Right to Occupy means stamp duty is also avoided, resulting in significant financial savings.

At present, more than three million over-65s in Britain would like to downsize, but many are put off from doing so by the stress, logistics and costs – including stamp duty – of moving. While Britain’s property market has enjoyed temporary reprieve from the levy, the government has shown no intent to make the holiday permanent, despite the obvious benefits of incentivising older people to downsize.

Introducing a Right to Occupy model in the UK for retirement communities could help sidestep the headaches caused by the current leasehold system while still providing operators with a viable flow of income to build and maintain shared facilities.

A UK Right to Occupy that exempts last-time buyers from stamp duty would also unleash pent-up downsizer demand and free up thousands of family homes for younger households.

However, it would not work for everyone. We must not forget there has been a 118% surge in the number of 55- to 64-year-olds renting since the turn of the last decade, with some in the industry, including ourselves, offering a rental service to meet this demand.

Rather than relying on systems from Britain’s feudal past to deliver the next generation of retirement housing, the UK should instead embrace new models of ownership and occupation to help fulfil the sector’s full potential.

Phil Bayliss is chief executive of later living at Legal & General