The UK government needs to take urgent action to encourage post-Covid investment in senior living accommodation, according to law firm Boodle Hatfield.
In a note, the London outfit called on the government to include retirement living in its National Infrastructure Strategy (NIS) to provide crucial additional funding.
“NIS is projected to include public spending of up to £100bn in just the first five years of a 30-year plan on key infrastructure and transformational change projects,” the note said.
“With the Bank of England recently issuing negative yield gilts for the first time, the government would be in a position to borrow to fund expansion of the sector at very little cost. Inclusion in this major national programme would also help encourage more private capital to join in funding senior living projects, which would further aid job creation in the construction sector,” it added.
In addition, Boodle Hadfield urged the government to consider guarantees on loans to stimulate private sector investment in senior living by reducing risk, and adjusting Real Estate Investment Trusts (REIT) rules for senior living facilities.
“REIT rules could be adjusted to have a special time limited exemption to allow development projects of senior living facilities to be held in REITs, as opposed to just the finished facility,” it said.
“This would encourage more money into the sector at a point in the economic cycle when investors might be more risk averse and be less willing to fund property development,” it added.
Boodle Hatfield real estate finance partner Adam Chamberlain (pictured) said the Covid crisis has highlighted the urgency of securing funding for lower-density senior living developments that afford more protection if there are future coronavirus outbreaks.
“We would expect that once the government has laid the groundwork to stimulate investment, the senior living model should take off, delivering returns for both private sector investors and the taxpayer,” he added.
