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Senior Living in Ireland

It is reported that Ireland’s population aged 65 and over will reach over 1.5 million by 2051. While some will require nursing home care, many will age living at home, either independently or with support from family members and/or third party care providers.

The nursing home transactions market has slowed down following the boom in 2019 and 2021 when a number of French and Belgian owner – occupiers and investors entered the Irish nursing home market by acquiring various assets, through direct asset and share acquisitions. There are various reasons for this including:

  • Energy prices
  • Recruitment issues, and
  • The Fair Deal scheme rates

The number of nursing home closures have more than doubled nationwide over a four-year period, and, according to the Health Information and Quality Authority (HIQA), 50 nursing homes have closed since 2019.

The Irish nursing home sector remains critical for many families and, in particular, for those whose elderly family members require regular support and care. Where there is little or no requirement for routine care or support, our elderly family members may prefer to live independently for as long as possible. While there has been a focus on alternative senior care and living models over the last few years in particular, further development and progress in the sector is required to allow Ireland’s growing elderly population to “age in place”, where it is appropriate for their care and support needs.

Historical trends

Between 2005 and 2010, a large number of retirement villages or independent living units (ILUs) were developed around Ireland as many developers and investors availed of attractive accelerated capital allowances available on developments costs. Generally, these ILUs were developed within or in proximity to the grounds of nursing homes, either by the owners of the nursing home or third party investors. These units were comprised of tightly grouped, linear bungalows with some garden/outdoor space.

It was thought that these ILUs would be used as an extension of the nursing home. The model generally saw the commercial investors leasing the units to the nursing home who would pay rent, and rent would in turn be paid by the residents in the units to the nursing home. The residents of the ILUs would be in a position to live independently and avail of varying care options and social amenities via the nursing home. The ILUs were typically managed by a management company (often the owners of the nursing home) and the residents paid a service charge, in addition to their rent.

While some of these retirement villages have been successful, the model has not always worked. The units struggle with occupancy, which is frequently associated with the location of the retirement villages, often in rural areas with little or no community amenities or public transport. In the Irish residential context, there is also a strong societal preference to own rather than rent one’s home. Therefore, many residents have historically opted to purchase the unit outright from the investor/developer as opposed to leasing it from the nursing home. Also, because of the HR crisis within the Irish nursing home sector and housing shortages throughout the country, many of these units are used to accommodate nursing home staff.

Current supply

A number of charitable organisations provide senior living facilities for rent. This is often means tested and the aim is to provide comfortable and secure housing for the elderly residents. Local authorities also provide social housing for older people, usually though relationships with an Approved Housing Body. Private investors/developers, however, are responsible for the majority of retirement villages in Ireland. The majority of these developments were built around 10-15 years ago and, as mentioned above, many of them are not considered to be fit for purpose.

Senior living complexes

With Ireland’s aging population, it is widely recognised that the development of an alternative style of senior living needs to be prioritised. There is strong support to follow successful senior living models in other countries such as the US and Canada, and in the UK, and develop senior living complexes, which unlike ILUs are not connected to a nursing home.

It is envisaged that this model would allow our elderly, at the appropriate time, to “downsize” or “rightsize” and move into purpose build complexes which would have the additional benefit of freeing up many of our three- and four-bedroom homes around the country for younger generations and family housing market.

While the general consensus is senior living alternatives are desperately needed and will go some way to assist with the nursing home and housing crises in Ireland, there are a number of factors to be considered by any investor/developer.

  1. While traditional, linear, single story bungalow-style of housing may be preferable for locations outside of Dublin and other city centre locations where land is more available and less expensive, in Dublin and other cities or commuter towns, modern apartment style retirement villages with ad-on facilities such as receptionist/concierge service, gyms, restaurants and coffee shops etc may be more attractive.
  2. A rental model appears to be more attractive for the investor and developer as it facilitates the sale of the retirement village as an investment in the future. While, in Ireland, people generally like to own rather than rent, the rental model is becoming more attractive for elderly residents as a more affordable option.
  3. The level of care to be provided will depend on residents’ requirements and preferences. Some residents will want to live in an older community with limited maintenance and the opportunity to avail of some services and engage socially while others, depending on their needs, will require different levels of care and support.
  4. An additional key consideration is commercial viability, particularly in the construction context. The maths needs to work. Much like other countries, the Irish construction market has experienced a significant level of inflation in recent years. While the cost of construction here has stabilised and there is increased capacity at the contractor level, getting certainty and having the ability to lock in a relatively fixed construction cost early on will be a key consideration for any developer or investor.

While there is strong support among our communities for the development of senior living alternatives, progressing these developments is proving challenging for investors/developers.

Planning considerations

Planning permission remains a significant hurdle for many senior living developments. There are a myriad of national, regional and local policies that need to be applied. For example, an application for the demolition of structure on site and construction of a 7-storey senior living 'Build-to-Rent' apartment building and all associated site works in Ringsend was refused on 21 November 2023. An Bord Pleanála considered that the development:

  • Did not comply with the restrictive zoning
  • Did not demonstrate it would be operated by an appropriate body, and
  • Was considered to be out of character with the streetscape

Developers will need to navigate the policy system to provide a robust case that the development is in accordance with proper planning and sustainable development.

It is also hoped that the much-anticipated Planning and Development Bill 2023 will reduce delays for obtaining planning permission. The Bill prescribes mandatory time limits for determinations of planning applications. In addition, reforms are proposed to the judicial review system such as criteria for who can bring an application, the introduction of a legal costs scheme and the ability of planning authorities to correct errors in certain circumstances, and specified timelines for judicial review proceedings. The Government hopes the Bill will be enacted in the first quarter of 2024. Please see our article for further details on the Bill.

Regulation

Under the Health Act 2007 (as amended) (the Act), the Chief Inspector of Social Services of HIQA registers and inspects a range of different types of residential centres, called ‘designated centres’. This includes designated centres for older people. A key question for developers and investors is whether ILUs and/or retirement villages, are or should be, registered as a “designated centre” and, therefore, subject to regulation and inspection by HIQA.

The legal definition of a designated centre in section 2 of the Act incorporates both traditional nursing homes as well as certain residential services provided to dependent persons for their care, welfare and support needs. However, for a residential service to be considered a designated centre for older persons under the Act, the following criteria must be met:

  1. It must be a ‘nursing home’ as that term is defined in the Health (Nursing Homes) Act, 1990 (as amended), or
  2. It must be an institution which is a residential service provided to dependent persons for their dependencies, care, welfare and support needs.

The term “nursing home” is defined as an institution for the care and maintenance of more than two persons requiring assistance with the activities of daily living such as dressing, eating, walking, washing and bathing by reason of physical infirmity or a physical injury, defect or disease, or mental infirmity.

The definition of ‘nursing home’ excludes certain institutions including:

  • Institutions managed by or on behalf of a Minister of the Government or the Health Service Executive (HSE)
  • Institutions in which a majority of the persons being maintained are being treated for acute illnesses
  • A maternity home
  • A mental institution
  • Institution for the care and maintenance of mentally handicapped persons operated otherwise than for profit and to which grants are paid by the Minister or the HSE
  • Premises in which children are maintained in pursuance of an arrangement with the HSE
  • Institutions operated otherwise than for profit in specific circumstances

Designated centres for older persons also include institutions at which residential services are provided to other dependent persons in relation to their dependencies by the HSE, a service provider under the Health Act 2007 or a person who is not a service provider but who receives assistance under section 39 of the Health Act 2004. This category incorporates a wide number of services, which are not nursing homes in the traditional sense.

Unless a service comes within the definition, it is not registered with the Chief Inspector and not subject to inspection or regulation by HIQA.

Other issues

Home support and care services

We are expecting to see a statutory scheme for home support and care services to progress in 2024. When introduced, the new law will require homecare and home support providers to hold a license from HIQA before they can operate. HIQA will monitor and manage compliance by public, private, and not-for-profit providers of homecare and home support services. Please see our previous articles for further details on the proposed new statutory scheme: Statutory Homecare and Home Support Services in Ireland and Homecare and Home Support Services: Legal Reform

Fair Deal Scheme

Fair Deal residents are required to contribute a percentage of their assessable income and rental income and other assets towards their care. The rules were recently changed to allow such residents keep 60%, rather than 20%, of the rental income from their private homes to encourage people to rent out their properties while they are in care and availing of the Fair Deal scheme. The Government has announced plans to allow Fair Deal residents keep 100% of such rental income.

The proposal is desirable as it would facilitate the rental of many of the vacant homes through the country. There are, however, some concerns, which have yet to be thoroughly considered. For example, what happens when family members seek to exit the rental market and there are already tenants in situ? In Ireland, it is not common for houses to be sold with a tenant included. Also, tenants’ rights to receive notice are enshrined in law and notice requirements may also be problematic when the house is to be sold. Also, to avail of the scheme, the HSE requires copies of the Residential Tenancies Board’s registration which may not always be available. We expect to see further discussion and developments on the Fair Deal scheme in the coming months.

Conclusion

Enabling people to age at home is widely acknowledged as a desirable societal goal. The planning and development landscape to achieve this goal on a nationwide scale is challenging. The crisis in the private nursing home sector is widely reported and many operators are struggling with the increasing cost of care and the disparities in Fair Deal funding for public and private nursing homes. Collaboration between developers, government bodies and voluntary organisations and investment is therefore essential and needed to establish a viable and future-resilient senior living model which delivers a variety of housing options and caters for the varying care and support needs of our aging population.

For more information and expert advice regarding senior living, please contact a member of our Corporate, Planning or Construction teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.



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