Business Clinic
New supported living fund

There’s a new £100m supported living investment fund looking to expand provision in the sector, is it the boost providers, commissioners and people with learning disabilities need?

Specialist supported housing supports people with learning disabilities or physical disabilities to live independently, within their communities, with security of tenure and care and support as required.

Its growth began in 2001, with the Government’s White Paper Valuing People. It pledged to transform services and enable people to lead full and independent lives. Further Government policy has built on this and local authorities have followed, with some significantly reducing the amount of residential care being commissioned for people with learning disabilities. The sector has responded by shifting services towards supported living, although it hasn’t been without its issues. These include different funding streams, ever-decreasing local authority budgets, considerations around regulation and concerns of isolation.

Although provision has steadily increased, in October 2016, Rob Grieg, Chief Executive of NDTi wrote in the Guardian that he was aware of policy coming full circle, back to residential care. He wrote, ‘commissioners have started to move back to a residential care model on supposed cost grounds’. He cited a consultation in Rochdale, ‘which seeks a £1.4m saving by “transforming” supported living provision and replacing it with a range of residential care and other services.’

Despite these pressures, for those looking to commission, operate or live in supported living, there’s a new pipeline of money for development to help increase supply.

New investment fund

The Supported Housing Investment Limited Partnership (SHIP) is a new joint venture between USS, one of the largest pension schemes in the UK, and Morgan Sindall Investments (MSIL), a developer and investor that works in strategic joint ventures with the public sector. The joint venture has committed £100m to drive forward and expand the future pipeline of supported living.

The fund is predominantly for investment in HB Villages, a specialist developer of purpose-built supported living apartments for vulnerable adults with learning and/or physical disabilities. MSIL owns a 50% stake in HB Villages. However, it does create opportunities for other developers, as well as providers, to work with HB Villages.

Richard Dixon, Director of MSIL explained the intentions for the fund, ‘Although the primary focus is on HB Villages and providing it with the capital it needs to drive forward and expand its development pipeline, SHIP also has the ability in appropriate circumstances to invest in good quality portfolios of specialist supported housing that have been delivered by other developers and investors.’ USS, as an investor, looks for long-term, stable returns.

HB Villages

HB Villages was set up as a strategic national response to what the company says is, ‘the widely acknowledged undersupply of “fit-for-purpose” housing for vulnerable people, enabling them to lead better and more independent lives.’

Its model provides purpose-built accommodation for vulnerable adults with learning or physical disabilities. The accommodation is designed to provide individuals with a greater level of independence and the ability to live in their own home, whilst receiving the care and support that they require. Integration and inclusion in community life is encouraged, along with the development of skills that enable greater independence (supported by the care provider).

HB Villages has delivered hundreds of apartments in 30 towns across England, valued at around £70m. It also has a £100m live development pipeline of apartments in planning or construction – with a significant proportion being built by MSIL’s sister companies, Lovell Partnerships Limited and Morgan Sindall Construction and Infrastructure Limited. MSIL’s property and asset management business, Community Solutions, will manage the portfolio of future schemes which SHIP invests in.

HB Villages’ schemes are commissioned by councils and clinical commissioning groups where significant local need has been identified. Once constructed, the properties are leased to partner housing associations on a long-term basis. The schemes are 100% privately-financed. Investors receive a return based on rental income, so as an investment proposition, Richard explained, ‘it is particularly suitable for long-term investors, such as significant UK pension funds like USS’.

The schemes bring together high-quality bespoke housing, personalised adaptive technology and person-centred support in a single integrated model. The HB Villages team works in partnership with registered social landlords, care providers and commissioners, including Inclusion Housing, Lifeways and technology provider, ATEL. The new fund and the expansion it brings will increase opportunities for other providers to be involved.

Richard continued, ‘HB Villages is already working with a number of registered social landlords and care providers…and it is keen to work with other high-quality providers to ensure that the right type of specialist supported housing and the associated care packages are delivered for local communities.’

Driving demand

SHIP sees long-term demand for supported living. Richard explained more, ‘As attitudes and government policy towards care have changed, to move increasingly in favour of greater independence, demand for purpose-built accommodation in the form of adapted apartments has grown rapidly.

‘Specialist supported housing provides a cost-effective alternative to residential care. The fixed costs associated with specialist supported housing are lower than residential care homes, so too is the cost to the taxpayer. The relevance of this solution is particularly acute in the current context where local authorities are coming under severe pressure to fund the costs of care for the vulnerable and elderly in the communities they serve.’

Over to the experts…

Is this dedicated investment in supported living welcomed? Will it create more opportunities for people to live independently? Is there sufficient demand for this additional supported living provision? Will it create opportunities for care providers? Will it face barriers with certain local authority strategies? Could this increase in the supported living pipeline put residential care at risk or is there sufficient demand for both types of provision?

Good to see money, but how far will it go?

People with learning disabilities want to be more independent and so it’s good to see more money for supported living because supported living gives people more choice and control over their lives. However, I worry about how far this money will go.

Social care is facing a huge funding crisis and, compared to this, £100 million seems like a drop in the ocean.

Whether this works depends on whether people with learning disabilities and families are involved in making the decisions. People with learning disabilities and families should work in partnership with providers and commissioners and be involved with the planning. Only the people who are going to use that funding know how it should be spent.

Some local authorities are moving away from supported living and are trying to take us back in time to when there was only residential care and people with learning disabilities were kept away from their communities. This is what is happening in Rochdale and other local authorities may want to do the same because of cuts.

This is wrong. We know that independent living is not ‘too expensive’. What’s expensive is creating the wrong housing for people with learning disabilities and then having to change it later on.

Every person with a learning disability should be able to choose how they live, where they live and how they are supported.

For me personally, as a person with a learning disability, I feel residential care is a step backwards. So I think it’s good that this money will be used to help people live more independently within their communities.

Gary Bourlet, Co-Founder, Learning Disability England 

Welcomed, but impact will, sadly, be negligible

Whilst this dedicated investment can only be welcomed, I believe that its impact will, sadly, be negligible. Currently, there’s a high level of uncertainty around tenants’ future ability to claim sufficient levels of Housing Benefit (HB) to meet rent levels of schemes like this.

The Government’s Local Housing Allowance (LHA) cut announcement made the provision of new supported housing considerably more difficult. The provision of new schemes substantially reduced immediately following this and hasn’t recovered.

In an attempt to ‘unblock’ the system, the Government published a consultation on the future funding of supported housing. It says that HB for supported housing tenants will be limited to LHA levels. It also announced a devolved local ‘top-up fund’ to bridge the gap between the extra costs of supported housing over and above the LHA cap, to be administered by local authorities. Experience tells us that such ‘funds’ are seldom sufficient to meet local needs and councils don’t always use them as intended.

Schemes like this will need to charge rent in excess of LHA levels. As attractive as an investment of £100m may seem, most providers and local authorities will be wary.

Understandably, Pension Funds need to protect their investments, rents need to be guaranteed. Although the proposed changes to HB will not come into effect until 2019, the worst-case scenario for providers (and councils, if they share risks) is that, if HB/local top-up funding is insufficient, they could be left with the liability for increasing numbers of unlettable voids for 20 years or more.

SHIP is a good potential source of funding that could provide much-needed homes, but the Government needs to provide assurance about the future of long-term funding.

Steven Rose, Chief Executive, Choice Support 

Investment and innovation in provision is welcome

Over the years, mainstream models of care have changed considerably. The supported living model has continued to increase its presence in the market and remains a popular area of growth for many of our clients.

Legally, in supported living services, there must be a clear separation between the care provided and the accommodation. Some service users are attracted to the model due to the security of tenure of accommodation and the ability to exercise choice over who provides their care – meaning that service users can retain some independence and control, compared to a traditional care home placement.

However, those factors can also present challenges for providers, who need to consider the practical implications and how to address situations where, for example, individuals lack the capacity to enter a tenancy agreement or need to be deprived of their liberty in order to receive care.

Both the demand and supply of supported living services has continued to grow over recent years. However, this type of service is not suitable for everyone and there continues to be a need for traditional care homes also. Personalisation requires consideration of how the needs of each individual can best be met, rather than a blanket preference towards any one model of care.

Any investment in improving the provision of care services in the sector is welcome. Innovation of new, good quality, fit-for-purpose services remains imperative. This will also be welcome news to local authorities, which are required by the Care Act to help develop a market that delivers a wide range of sustainable high-quality care services, which will give people more control and help them to make more effective and personalised choices over their care.

Laura Guntrip, Associate, Lester Aldridge

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