Later Living Communities can benefit Scotland - comment

A significant realignment in practically every part of our society is inevitable as we get to grips with life as we know it following the Covid-19 pandemic.

This new model of housing provision is well-established in other countries, says Whyte (file pic). Picture: SeventyFour.
This new model of housing provision is well-established in other countries, says Whyte (file pic). Picture: SeventyFour.

The way we socialise, interact with friends, do our shopping, and how we work and indeed where we work, are the most obvious areas where change is already happening. As a residential property sector specialist, another area I think deserves re-evaluation is how we plan for the future in building homes and communities for Scotland’s ageing population.

The number of people aged 75 and over is set to increase by 85 per cent by 2039, meaning that Scotland will be home to more than 800,000 people over the age of 75. This has implications for how we provide healthcare, housing and support services, and we must ensure the right support is available for older and disabled people, so they can live safely and independently in their own homes for as long as possible.

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Rodney Whyte, partner and residential property specialist at Pinsent Masons. Picture: Simon Price.
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This new model of housing provision is well-established in, say, Australia and the USA, and is gaining traction in England where Later Living Communities are being supported by blue-chip investors. Ancillary services such as on-site GP surgeries, gyms, swimming pools, consultant rooms, restaurants, retail units and traditional care home facilities offer varying levels of care support.

During the lockdown, the experience of Later Living Communities has been overwhelmingly positive. The benefits of community living has boosted residents’ wellbeing, while bolt-on services such as care assistance have proven to represent a valued element of the housing delivery framework.

Fully planned and designed Later Living Communities could become part of the housing solution in Scotland and indeed part of policy, helping bring under-occupied housing back into the market.

Real alternative

By increasing independent living years in self-contained, bespoke designed communities, there could be a reduction in terms of the state burden to provide social care and health care. This could be replicated in Scotland as a real alternative to the current stark choices of private housing versus care home provision that our older generation often face, but it needs Holyrood politicians to address an anomaly in our distinct legal system.

Whereas in England, developers of later life residential units and care facilities would typically enter in to long leases with individual owners/residents, in Scotland developers are prohibited from entering in to long-lease agreements. This long-lease arrangement supports the significant up-front investment in the community and related communal facilities, and provides a legal structure to secure an investment return for the developer over many years, and a marketable asset to secure further investment.

There is a potential work-around involving the use of standard securities, but under current Scots law there is a provision in certain circumstances for an automatic right of discharge after 20 years of the standard security (the right of redemption). This could disrupt the certainty of a long-term return.

There is precedent in that there have been various ministerial exemptions already given to remove the right to redeem Standard Securities under the 20-year rule in relation to, for example, the New Supply Shared Equity Scheme that is part of the low-cost initiative for first-time buyers.

I would suggest the property sector should further impress upon Scottish ministers the case for extending the exemption to a defined ownership-based Later Living product, which will create a platform with investment value for developers and investors and the legal basis for a product that is clearly proving attractive elsewhere.

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In addition to the benefits already outlined, acting now would give developers a new active market to target at a time of likely depressed activity and distressed land values, and a reasonable prospect of creating a product capable of investment within three to five years.

Rodney Whyte, partner and residential property specialist at Pinsent Masons

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