Sarah Walker, an expert in legal advice on older people’s housing and healthcare for older people, argues that the reinvigoration of commonhold could be the opportunity for growth that the retirement housing sector so badly needs. We’re delighted that Sarah will be running a breakout session at our Future of Ageing Conference on Thursday 6 February 2025. For more information and tickets, please see here

On 21 November 2024, Matthew Pennycook MP, the Housing Minister announced the Government’s intention to publish a new draft Leasehold and Commonhold Reform Bill in 2025, with a central focus to reinvigorate commonhold and establish a new legal framework that makes commonhold the default tenure for new flatted developments, as opposed to leasehold. In September 2023, there were around 4.98 million leasehold homes in England of which 70% were flats, with an estimated 94% of leasehold flats being owner-occupied. Leasehold remains the primary way in which retirement homes are sold, where the retirement homes form part of a wider development in which there are ongoing facilities and services supplied to residents.

Commonhold democratises land ownership by removing the landlord and tenant relationship. Instead, it offers a form of freehold ownership in which each owner owns their own unit and is also a member of the commonhold association which owns and manages the common parts in the building or wider development.

Commonhold gives owners greater control but it also imposes obligations in respect of the maintenance, repair and use of communal areas. It requires owners to take part in regular association meetings, to act as directors and company secretaries, make company filings and discharge other legal duties.

Generally, residents choose retirement housing to live in a place where they are protected from worries about repairing and decorating their home, and other obligations. They can benefit from the communal facilities offered by retirement housing operators as well as the extra care and assistance on offer to help them with their daily lives, without having to manage and procure those services themselves. If commonhold applies to retirement housing without reform, residents will be exposed to a management burden that they might not be willing or able to take part in, risking degradation of the facilities over time, insolvency of the development and potentially higher costs of operation.

With this stark reality, it could be said that retirement housing should be exempted from commonhold reform, staying with the existing leasehold format unless and until a different tenure is found for the sector (like the approach taken in New Zealand and Australia).

However, whilst we are supportive of a bespoke tenure for retirement housing in the future, we do not agree that an exemption in the short or medium term would help the sector or be the right answer for residents.

We have considered the application of commonhold to retirement housing in detail in a report we recently co-authored with McCarthy Stone. In that report, we suggest some ways in which commonhold could be adapted to suit retirement housing, to protect residents, operators/developers and investors alike.

We argue that, rather than being left behind in a legacy leasehold system, the retirement sector should embrace commonhold reform and engage with Government to drive a version of commonhold for the sector that is forward looking, long term in its thinking and promotes growth.

The recent report from the Older People’s Housing Taskforce shows that retirement housing is seriously undersupplied. It is an important sector that can help Government deliver its wider objectives for more housing and less pressure on the NHS.  People tend to live longer, happier, more independent lives in the right housing in later life, whilst also freeing up family homes and helping regenerate the areas in which it is situated.

Embracing commonhold is a chance to improve transparency and public perceptions of this form of housing. With the right areas of reform, it has the potential to standardise the retirement housing product, which is better for residents and for investors. The Government has been clear that it is supportive of a strong retirement housing sector.  The reinvigoration of commonhold could be the opportunity for growth that this sector so badly needs.