Why Adapt Your HMO Strategy For Assisted And Supported Living

Are you ready to transform your HMO portfolio and tap into the surging demand for assisted and supported living accommodations? With ageing demographics and evolving social attitudes, these specialised markets present a compelling path for diversification and robust returns. Discover how thoughtful design and strategic partnerships can position your investments for long-term success in this dynamic and purpose-driven sector.

WHAT ARE SUPPORTED AND ASSISTED LIVING HMOS?

Supported and Assisted Living are specialised residential spaces that combine communal and personal care services. Typically, HMOs and other properties rented for supported and assisted living are designed to meet the needs of individuals who require some level of assistance with daily activities while maintaining a level of independence.

ASSISTED LIVING HMOS

These HMOs and properties focus on housing elderly residents or those with continuous care needs. These facilities typically offer meals, personal care, medical attention, and social activities within a communal living setup. They provide a safe, supportive environment that allows for autonomy while offering the necessary care and services the residents need.

Assisted living arrangements are designed to feel more like a home than a medical facility, promoting a higher quality of life. When falling under the regulated activity of “accommodation for persons who require nursing or personal care”, they require registration with the Care Quality Commission (CQC) for providing both accommodation and care services together, typically subject to more stringent standards and regulations due to the higher level of care provided.

SUPPORTED LIVING HMOS

These properties are tailored to house individuals with specific requirements, often with disabilities or particular conditions that require support while promoting independence. While these might not include full-time medical care, supported living arrangements may offer additional support, from financial management to transportation, personal care, and, in some cases, job training.

Supported living environments seek to enable residents to lead as independent lives as possible, with the design and support services integrated to enhance daily living without imposing unnecessary restrictions. They may not require CQC registration if only providing housing without personal care.

These housing needs aren’t too different and often overlap, but the main distinction lies in the intensity of care and the independence required by the residents. For our purposes, we’ll focus on the shared attributes impacting the design and other investment considerations.

HMOs designed to provide housing for this particular market not only aim to fulfil a critical need in the community but also present a viable business opportunity for investors. As property investors, we can contribute to addressing the demand for specialised residential care facilities, while potentially benefiting from higher yields compared to standard rental properties due to the specialised nature of the spaces and the long-term stability of tenancies.

IS THERE A DEMAND FOR SUPPORTED AND ASSISTED LIVING HMOS

Let’s start with a simple question: what drives people’s housing needs? The property market is linked to the evolving conditions of our society, particularly age, income, and other social factors shaping the housing demand. However, when we look at assisted and supported living, our focus shifts to specialised care needs, in addition to the affordable and shared-living aspects that define the HMO property.

THE TRENDS IN ASSISTED AND SUPPORTED LIVING MARKETS

Population growth generally increases housing demand, but today’s market tells a more nuanced story. We’re seeing a shift where there’s an increased awareness about the ageing population and peoples’ health needs. The prevalent idea that shared living “is not just about providing affordable housing” takes on a whole new level to create spaces where residents can receive the care they need while maintaining their independence, whether they’re elderly citizens who need assistance with daily activities or individuals requiring support due to their particular situation, such as living with a disability or a mental health condition.

Regarding housing for assisted and supported living, two key considerations can help us understand the demand and the long-term market’s potential. 

1. AGING POPULATION

Like many developed nations, the UK is experiencing a steady growth in its ageing population, a trend expected to continue in the coming decades. The ONS projects that by 2050, one in four people in the country will be aged 65 years and over —up from approximately one in five in 2019, already a considerable number. 

This change highlights the need for housing options that cater specifically to the needs of this group, who may [at some point or another] require some level of assistance with daily living activities and benefit from community living and a degree of independence —the type of settings provided by HMOs with self-contained units combined with communal areas.

2. HEALTH CONDITIONS

Our modern society recognises and addresses the needs of vulnerable people and those with disabilities more openly. But is the market prepared to cover the current and future demand for living arrangements that support individuals with these needs?

1. As of 2021/22, an estimated 16.0 million people in the UK had a disability, 24% of the total population. This proportion has increased from 18% in 2002/03, with most of the increase occurring in the last decade.

2. In addition, disability becomes far more common as the population gets older —affecting just 11% of children but nearly a quarter (23%) of working-age adults and as many as 45% of those over the State Pension age.

3. The NHS reports that “one in four adults experiences at least one diagnosable mental health problem in any given year”, and it singles out mental health as the most significant cause of disability in the country.

4. According to the Mental Health Foundation, there is an overlap between severe mental health problems and long-term physical conditions, with 37.6% of the population dealing with both simultaneously.

5. In its Supported Housing Review for 2023, the government acknowledged the immense unmet need for this critical type of housing, estimating that the country requires between 179,600 and 388,100 additional supported housing units to address current demand adequately.

This rising demand underscores the importance of understanding the specific needs of these demographics. Successful investment, in this case, is about properties that are profitable but also genuinely beneficial for their residents. As an investor, aligning your portfolio to include properties that meet these criteria can tap into a growing market, ensuring long-term viability and societal contribution.

WHY INVEST IN ASSISTED AND SUPPORTED LIVING HMOS?

Assisted and supported living schemes are particularly attractive to HMO investors because of their likelihood of long-term tenancies. Unlike traditional rental properties, these facilities maintain higher occupancy rates with longer-term tenancies, with landlords dealing directly with housing associations or registered providers and not the individual residents —taking direct management off the table. Ultimately, this stability is a form of shield from the fluctuations usually seen in the broader rental market, such as student HMOs and holiday lets —both highly influenced by seasonality. 

This sector also presents an opportunity beyond traditional HMO investments for property investors seeking portfolio diversification. An increasing unmet demand for high-quality accommodations for elderly residents and individuals requiring specialised support is the kind of gap that savvy investors recognise.

FINANCIAL CONSIDERATIONS

While initial investment costs typically exceed those of standard HMOs. There are necessary adaptations like accessibility features and specialised facilities to consider, yet the returns often justify the additional expenditure. Properties offering solutions for specialised and comprehensive care can command premium rates. 

Moreover, these investments tend to be more resilient to market fluctuations, as the need for supported living accommodations remains constant regardless of broader economic conditions.

REGULATORY REQUIREMENTS AND LICENSING

Assisted and supported living properties must navigate a complex regulatory environment. An HMO in this sector must comply with additional requirements beyond standard property rental permits. These licenses ensure the facility meets the health and safety standards necessary for care. Depending on the location and the type of services offered, this might include enhanced fire safety measures, accessibility features, and other care-specific requirements.

To break into this property market, investors must understand these considerations. Even if management falls outside their scope of responsibility, by knowing the regulatory landscape and financial implications, investors can make better-informed decisions —from selecting the right property to proceeding with a complete conversion —and capitalise on the growing demand in this sector.

ARCHITECTURAL AND DESIGN CONSIDERATIONS

Converting or developing properties for supported living demands expertise in both design and compliance —areas where many investors initially feel overwhelmed. From my experience overseeing numerous successful conversions, forward-thinking design that seamlessly integrates accessibility with comfort is essential for a winning strategy.

This means incorporating features like smart home technology and adaptable living spaces while ensuring compliance with specialised care standards and HMO regulations. By approaching these projects with a thorough understanding of current requirements and future trends, we can create living spaces that meet regulatory standards and exceed the expectations of residents and operating organisations, ultimately maximising your investment’s potential.

Typical property considerations for assisted living HMOs include larger minimum space requirements, more extensive communal facilities, higher specifications for kitchens and dining areas, more complex fire safety and evacuation systems, and the need for dedicated staff areas and medical storage.

HMOs targeting the supported living market may require adaptations such as more flexible property configurations, individual cooking facilities, and layouts to accommodate private space and adaptable support areas. Yet, they might show a more straightforward conversion potential from existing properties.

DESIGNING FOR ACCESSIBILITY AND COMFORT

Effective design for assisted and supported living environments involves a deep understanding of the needs of residents who may have mobility issues or require specific care —and a great deal of aesthetics. That’s why we focus on creating spaces that are not only functional but also comforting. This includes wider doorways, inside and outside ramps (including parking area), non-slip floors, and sufficient room for mobility aids in individual units and communal spaces.

The design must offer a sense of independence and dignity. Residents should feel at home with designs that allow them to perform as many tasks as possible or receive assistance when needed. This could involve adjustable kitchen counters, easily accessible showers (e.g., space for equipment and even a care provider), and technology to assist day-to-day activities.

Automated systems that control lighting, temperature, and even window shades can significantly enhance the living experience. Additionally, incorporating green building practices not only respects the environment but also ensures that buildings are sustainable and cost-efficient in the long run.

When approaching design, we’ve identified several investments that can increase property value while significantly improving marketability, including: 

a) Essential adaptations
– Level-access showers with discrete support features
– Fire safety systems with integrated emergency lighting
– Widened doorways and accessibility ramps

b) Smart technology integration
– Wireless emergency call systems
– Smart lighting with motion sensors
– Video door entry systems
– Smart temperature and environment control

c) Property layout adaptation
– Open-plan communal areas with flexible partition options
– Wheelchair-friendly kitchens with adjustable features
– Multi-purpose activity spaces

d) Energy-efficient adaptations and future-proofing:
– LED lighting systems with motion sensors
– Smart heating controls with zone management
– Enhanced insulation and draft proofing
– Pre-wiring for additional technology integration
– Modular bathroom systems allowing easy updates
– Expandable communal space options

Examples of modern assisted living facilities show a trend towards spaces that feel less like institutions and more like communities. They feature communal areas to encourage social interaction and gardens that offer serene settings, some of which come as private apartments to provide more personal space. All are designed with both functionality and beauty in mind, proving that practical spaces can also be appealing.

KEY TAKEAWAYS FOR HMOS IN ASSISTED AND SUPPORTED LIVING SECTOR

– The rising prevalence of disabilities and health conditions suggests an increasing need for supported living options.
– The various conditions indicate a need for diverse living accommodations to cater to different needs.
– With disability prevalence increasing with age and a growing ageing population, there’s likely a growing demand for age-appropriate assisted living options.
– Properties in the assisted and supported living sectors are likely to experience more stability with higher occupancy rates and longer-term tenancies.
– Technology integration should be scalable for future expansion and user-friendly for both staff and residents.

Assisted and supported living accommodations offer significant opportunities for property investors. These sectors have the potential for substantial financial returns and fulfil an increasing societal need, giving investors a chance to make a significant impact while growing their portfolios.

We aim to create exceptional living environments that empower residents to thrive, pushing design standards beyond minimum safety and accessibility requirements. Whether you want your property to enhance the quality of life for assisted/supported living or tailor a strategy for your investment goals, we can help. Reach out to discuss your strategy.

Disclaimer

The information provided on this blog is for general informational purposes only and should not be considered legal, tax, financial or investment advice. Please note that laws, regulations, and market conditions change. Verifying the information’s accuracy and relevance before making any decisions is crucial.