Housebuilders may face their fair share of challenges when it comes to bringing developments forward, but spare a thought for developers of retirement homes.
From providing large amounts of communal areas to a lack of formal recognition in the planning system, the problems are many and varied.
At Property Week’s inaugural Retirement Living conference earlier this month, McCarthy & Stone chief executive Clive Fenton provided some answers.
See our full gallery of images from the first-ever PW Retirement Living Conference by scrolling through above
Could you describe the journey that McCarthy & Stone has been on in recent years?
The business was taken private again back in 2006 and obviously that was not a good time to be doing that. The business was recapitalised and when I joined in 2014 we were on the path to bringing the company back to the listed market. We’ve been on a strong growth trajectory aiming to double the size of the business.
When I joined the business, we were producing around 1,500 homes a year. We’re [now] on the journey to get that to 3,000 homes. We listed the company last November, we’ve now got a really strong capital base and we’re investing for growth.
What is your market share? Do you have ambitions to grow it?
We’ve got a 70% market share. We didn’t set out to get that market share. It’s just the way it is. It’s about the intellectual capital that we’ve built up over the years. If you look around at some of the companies that are working in this space, originally they came out of the McCarthy & Stone stable. We’re not looking to protect our market share.
How would you describe the market you are targeting?
I think ours is very much a mid-market offering. People who are going to buy our homes really have to have some sort of equity in their own properties. We don’t look at the social housing market - that’s for other people to explore. We think of our customers as the sort of people who shop in Sainsbury’s or Waitrose.
Why do you think you don’t have more competition?
It’s quite expensive to build the sorts of products that we build, and I don’t think that is always taken into account when setting the social housing and CIL [Community Infrastructure Levy] requirements. One thing we find very interesting is why we have the market share that we have and why more people aren’t coming into this market. I think that the incentives to come into this market are non-existent.
Why would a mainstream builder come into the market when all the incentives are with building homes for first-time buyers?
If the government were to think more widely it could incentivise a wider variety of homes. On a one-acre plot that we build on, we can provide 40 homes for people. So those people free up their own homes and actually it frees up homes all the way down the chain to the first-time buyers.
Is the planning system a big problem for you?
I think the planning system is problematic, but I don’t think it’s any more problematic for us than it is for anybody else. But I do think there is very little thought given to how the planning system could incentivise more homes for the elderly population.
There is very little guidance to it in national housing policy, even though 74% of all household growth is forecast to come from the over-65 age group and we know the elderly population is going to increase by 50% over the next 20 years.
And yet there is no real thought in terms of planning policy about how this is going to be dealt with. There is a demographic time bomb. And older people do want to downsize - it’s just that there isn’t any choice for them.
What needs to be done?
The government needs to think carefully about how they can incentivise local authorities to plan properly for their elderly housing needs. I thinking looking at affordable housing policy in terms of things like CIL payment and whether something can be done about that would be helpful. And then we need to look at demand and what you can do to help people to move. The costs of moving are very high and it puts people off.
Stamp duty is an obvious lever to use. We’ve done quite a lot of research that shows that if you relaxed stamp duty for people downsizing, the actual take for Treasury would be a lot more. It’s a win-win for everybody