KPMG's thought leadership pieces, "Reimagine …", set the team a hard task; to come up with new and creative ideas to solve some of the most difficult public policy problems.
This report, "Reimagine housing" concentrates on supported housing. The KPMG team has set itself three rules:
• to produce better public outcomes without increasing the tax burden
• to align government policy and philosophy
• to make proposals which are realistic and deliverable.
The report highlights the inherent difficulty in the current system. The younger generation cannot afford to buy and the older generation often own property which is too big. It is a disincentive to the elderly to sell their homes because the crystallisation of assets is immediately used to cover care costs. The consequence is that they either hold onto homes (meaning the homes are not available for the younger generation) or sell up, running the risk that their family’s inheritance disappears.
The KMPG report gives us three suggested solutions to the current problem:
Four way distribution of assets on the sale of a home by the elderly
On the sale of a home, the proceeds could be used in the following ways:
• a fixed payment into a trust for family inheritance. The amount should be agreed at the outset and it is suggested to be a % of the sale proceeds;
• funding a smaller, more suitable home
• an annuity to provide an extra source of income
• an amount paid to the local authority to buy an annuity to guarantee a fixed contribution to care costs.
New care communities
The report envisages a new kind of care communities, perhaps provided by public-private partnerships with the local authorities and the NHS. These communities will be designed to cope with all the stages of old age. The report suggests that the advantages will include:
• Helping local authorities to meet their duties to cater for all housing needs
• Giving investors confidence
• Providing high standards of design and care
• Providing economies of scale
The move away from means-testing could reduce care costs and uncertainty over bills, meaning that local authorities would need to borrow less to support individual care funding.
Discounted accommodation for the young to help combat loneliness for the elderly
The final suggestion is to offer accommodation with the elderly to the younger generation at a reduced rate in exchange for help with housework or simply to provide company. For the young, this offers an alternative to living in HMOs and paying high rents. This offers the home owner a level of income, company and possible protection from the unscrupulous. For government, this may offer a reduction in spending if the scheme were extended to recipients of Housing Benefit.
The KPMG report does not provide any financial analysis or figures to back up any of the ideas. But that is not what it sets out to do. It “reimagines housing” and it will be interesting to see if any of the ideas are picked up in developments in the Build To Rent sector and in alternative residential investment strategies.