The age old problem

The formation of the coalition government led to the usual locking of horns about politics in my family. But over the years, we have found a way of moving from fundamental disagreement to common ground. When the merits of a government that puts such an emphasis on owning property came up, I pointed out some of the disadvantages emerging from decades of government encouragement for owner occupation among lower income households: the plight of poor, older homeowners who are struggling to maintain, adapt or improve their homes. The preferred tenure of owner occupation is working its way through the age groups creating a situation which is new in both scope and scale.

‘Equity rich, cash poor’ is the oversimplistic definition. In fact, a high proportion of low-income homeowners do not have significant equity in their homes. To date, equity release schemes, which for some could be a part of the solution, have been discredited because proper safeguards were not put in place when the private sector moved into this new market. Common ground emerged in the family debate when talking about older relatives being inundated with literature promoting an equity release scheme in the North East run by a rogue company.

Help the aged

The number of older households who are homeowners will increase significantly between now and 2026 - much of this increase will be in the over-75s age group. According to Department of Work and Pensions data, two-thirds of low-income older households are homeowners. The 2007 English House Condition Survey shows that one in six live in a home which is considered ‘non-decent’ and one in three live in homes that do not meet their needs in terms of accessibility or adaptations.

High levels of low-income owner occupation, combined with increased longevity, is a new social phenomenon, one which requires national policy recognition and the development of solutions.

Hact has set up the ‘Fit for Living’ Network to explore the new, innovative financial models, policy frameworks and practice that are needed to prevent a further increase in the number of low-income older homeowners living in sub-standard homes. Initially, we have been getting to grips with the scale of the problem and numerous studies that have demonstrated that small improvements make a big difference and lead to savings elsewhere, for example, in hospital admissions, delayed discharge and increased demand on social care provision. We grappled with some of the systemic problems and barriers. Aids and adaptations for example can transform the lives of people with disabilities. Yet the legislation, eligibility criteria and systems for administering disabled facilities grants are a mess.

Less than half of those low-income homeowners who are entitled to do so claim pension and council tax benefits. Encouraging them to do so is vital. As is one-stop information and advice about the range of support available. Locating people in need through DWP and tenure data and combining this with the knowledge and networks of local agencies could ensure this is well targeted.

But the real problem is that the cost of making the homes of vulnerable older homeowners decent exceeds the national funding allocation for private sector housing renewal.

Lack of funding

Home Improvement Agencies continue to play a vital role but struggle as a result of lack of financial support for their clients since the abolition of mandatory grants and increased local authority discretion which backs equity based schemes. With funding from the Henry Smith charity, Hact recently supported two community development finance institutions in creating equity based products. Wessex Reinvestment Trust developed a loan scheme working with investment from 10 local authorities in the south west, together with HIAs and regional government. The product provides homeowners with access to low-cost, low-risk, hassle free home repairs while local authorities are able to maximise the impact of their grant funds. Working in east London, London Rebuilding Society developed a different solution with a product based on equity reversion. The homeowner swaps a percentage of their equity in return for a structured package of repairs, maintenance and home improvement services. Using a network of local agencies, the package is tailored to the individual needs of homeowners and the services are provided by LRS. But these schemes cannot be self-financing given the costs of development, administration and joint working between agencies required to deliver the sort of packages which can gain the confidence of vulnerable older people likely to be nervous about equity-based products.

Let’s work together

Many housing associations are already involved in running home improvement schemes and could improve joint working with advice , information and community development finance agencies. Arm’s-length management organisations and large scale voluntary transfers are in a key position to identify older people who’ve exercised the right to buy and potentially deploy their technical services to help. But should resources raised from the poorest subsidise poor homeowners who have gained already from fiscal benefits, including right to buy discounts? On the other hand, the failure to tackle poor conditions in the private sector contrasts starkly with upgrading of the social rented sector based on decent homes standards.

In tackling the fiscal crisis, it would be easy to forget one of the fastest growing areas of housing need. The recent Queen’s Speech does not bode well. A passing nod to concerns about social care and pensions from government ignores the potential for investing to save in addressing the appalling housing conditions of older people who have tried over a lifetime to help themselves but can do so no longer. With will, innovation and a little upfront investment, surely common ground can be achieved.

Heather Petch is director of Hact