HOUSING

Key points

Introduction

Most older people prefer to remain in their own homes rather than moving into residential care. Recent government health policies promoting home-based support services have responded to older people's expectation that they will continue to live in their own homes for as long as possible. It is important that older people have appropriate housing to support this policy direction.

Older people's housing needs include a safe and comfortable environment, low maintenance and well-sited dwellings with easy access to shopping, transport, recreational and community facilities. Among the most vulnerable groups in the housing market are frail older people, older women living alone, older Maori, older Pacific Islands people and those for whom New Zealand Superannuation is their only source of income.

Housing Demographic Information

Geographical location

People aged 65 and over made up 11.4% of the total population in the 1991 Census. This proportion was not evenly distributed between geographical districts. While some people retire in the community where they have been living, others move to areas that offer specific lifestyle options. Areas with a significant percentage of older people are the Kapiti Coast, Thames-Coromandel and Tauranga. In these regions, there is likely to be a greater demand for housing and other services that meet the needs of older people than in other regions.

Dwelling type

In 1991, most people aged 65 years and over lived in private dwellings, with only seven percent living in rest homes, hospitals or similar accommodation. Those living in residential care were mostly aged 80 and over. Only 2% of people aged 65 to 69 lived in residential care compared with 13% of people aged 80 to 84 years and half of those aged 90 or older. Most older people in private dwellings live in separate houses, but older people are more likely to live in flats or houses that are attached to others.

Living arrangements

In 1991, 50 percent of people aged 65 and over who were residing in private dwellings lived with a spouse or partner, and one third lived alone. A further 12 percent lived with their children or siblings. Of men aged 65 and over, 18% lived alone, whereas 44% of women lived by themselves. The likelihood of living alone increased with age; approximately half of all those 80 years and older were living alone. Older Maori and older Pacific Islands people were more likely to be living with their children or siblings than other ethnic groups.

Issues Facing Older People Who Rent

In 1991, 12% of older people lived in rental accommodation. Affordability is the most significant factor influencing older people when deciding the type of rental housing in which to live. The other factors are availability and supply of housing. The small number of two bedroom units means many older renters live in bedsits or one bedroom units which may not meet their needs. In a bedsit, a tenant's living room is combined with their bedroom, which can make it embarrassing to entertain visitors, particularly for older women. A bedsit or one bedroom unit can restrict social contact with families and the ability of an older person to remain independent. The lack of facilities for caregivers to stay during periods of illness can lead to unnecessary overnight, or longer-term entry, into hospital or residential care facilities. On the other hand, the lack of large rental properties can make it difficult for older members to live with their extended family.

The cost of moving is a significant inhibitor to older people changing their accommodation. These costs include advance rental payments, rental bond, energy supplier connection charges, telephone connection costs, and actual removal costs. The cost factor is a particular barrier to older people whose only income is New Zealand Superannuation.

There are gender and cultural differences in housing tenure:

• fifteen percent of women aged 75 and over live in rented accommodation compared with 11% of men of the same age; and
• older Maori and older Pacific Islands people are more likely to live in rented accommodation than their Pakeha counterparts. Factors contributing to these differences include the generally lower average income level of Maori and Pacific Islands peoples and cultural expectations of providing financial support to family and their communities. This means less income is available for home purchase. As a result, many older Maori and older Pacific Islands people have significant housing costs in either rent or mortgage payments.

Recent changes to government housing policy which have seen the removal of government incentives for low income earners to purchase homes, including the removal of subsidised home loans, may result in a future generation of older people who do not have equity in a residential property. This indicates a possible higher demand in the future for rental properties suitable for older people.

Housing New Zealand tenancies

Housing New Zealand is the major provider of public housing for New Zealanders of all ages. Its role is both to manage public housing on a commercial basis and to contribute to the Crown's social policy objectives of facilitating access to rental housing for those on low incomes. The recent trend has been for Housing New Zealand to sell more properties than it purchases. Forty-three percent of older tenants rent from Housing New Zealand. As part of the housing reforms, rents for Housing New Zealand properties have gradually been increased to market rates. Community organisations report that these higher rents have caused significant affordability problems for older people. With the move to market rents, Housing New Zealand introduced a policy of "matching" tenancies, reinforced through higher rentals for larger properties, to encourage single tenants and couples who lived in three or four bedroom homes to move to smaller homes or units.

Tenure protection policy

Recognition of the difficulties older people face in moving house or leaving established community networks led to the introduction of a tenure protection policy as part of the housing reform process. Under this policy, Housing New Zealand or Te Puni Kokiri tenants who were resident at 1 October 1992 and were aged 65 and over, or those with significant disabilities, are not required to move and a Tenure Protection Allowance (TPA) is provided if their rent is higher than the average for the region.

Until recently, the TPA was only available while tenants remained in the property they occupied at 1 October 1992. This was causing considerable financial difficulty for those tenants who, because of a change in circumstances, had moved. Since 1 October 1996, tenants who receive a TPA and wish to move have been able to apply for a Special Transfer Allowance. The allowance is calculated as the difference between the tenant's new rent and the average rent for the region, but cannot be greater than the applicant's TPA prior to moving. The TPA is an interim provision only and is not available for tenants who turned 65 years after 1 October 1992.

55 Plus provisions

The 55 Plus provisions have been introduced by Housing New Zealand to target tenants who are approaching retirement age. The provisions are designed to give tenants rent stability for three years while they make decisions about their future accommodation. Many of those eligible are also receiving a Transitional Retirement Benefit. To be eligible for the 55 Plus provisions, the principal tenant, or their partner, must be aged 55 or over and have lived in their present tenancy since 30 July 1991. Under these provisions, the tenant's rent cannot be raised above the average regional rent, or their existing rent if this is greater, for three years as from 1 July 1995.

Local authority pensioner housing

At 22 June 1996, there were 13,959 local authority pensioner units which housed 28% of older people who lived in rental accommodation. Eighty-two percent of tenants in local authority pensioner housing units had annual incomes of less than $15,000. Although each local authority owns some pensioner housing units, the distribution of pensioner housing varies significantly between local authorities.

Comments received from older people indicate that they prefer pensioner housing units to be sited in community settings, rather than in distinct pensioner housing areas which can be isolated. Although many local authority pensioner units are either bedsits or have only one bedroom, a number of local authorities are modifying these units as part of refurbishment programmes to better meet the needs of older tenants.

Most local authority pensioner housing units were built with the assistance of low interest government loans. As a result of the housing reforms, the interest rates on these loans were raised to market rates. Since then, there has been considerable public concern that local authorities may consider selling their pensioner housing units.

A survey undertaken by the Department of Internal Affairs in 1995 indicated that the majority of local authorities had no plans to sell pensioner housing. The survey found that only 60 pensioner housing units had been sold in the previous five years and further investigations by the Advisory Council for Senior Citizens found that the money from these sales was used either to purchase more appropriate units or for refurbishing existing pensioner housing.

While it appears that most local authorities are committed to retaining existing pensioner housing, there is no evidence that they are planning to increase pensioner housing stock. With an ageing population, there will be greater demand in the future for housing designed to meet older people's needs.

Privately owned rental accommodation

Twenty percent of older tenants rent privately owned accommodation. The number of older people living in privately owned rental accommodation is likely to rise because:

• there will be more older people;
• it appears that the level of public housing stock will not be increased; and
• an assumption cannot be made that the current level of home ownership in New Zealand will be maintained.

Accommodation Supplement

The Accommodation Supplement was introduced on 1 July 1993 as the main form of government housing assistance. It provides for a 65% subsidy for rental outgoings which exceed 25% of household income or, in the case of home-owners, a 65% subsidy for regular housing expenses which exceed 30% of household income. The Accommodation Supplement is subject to a cash assets test undertaken by Income Support which determines entitlement and the level of assistance, as follows:
• for a single person, the cash assets exemption is $2,700 and those with cash assets over $8,100 are not eligible. Assets between $2,700 and $8,100 reduce the level of Accommodation Supplement by one dollar for each $100 of cash assets; and
• for couples, the cash assets exemption is $5,400 and those with cash assets over $16,200 are not eligible. Assets between $5,400 and $16,200 reduce the level of Accommodation Supplement at the same rate as for a single person.

These asset levels are of concern to older people for the following reasons:

• most older people try to keep some money aside for emergencies, or to give them the dignity of paying for their own funeral costs. About $5,000 is the usual sum older people put aside for funeral costs. This is considerably more than the lower asset level set for a single person receiving the Accommodation Supplement;
• an older single person receiving the Accommodation Supplement, who has $5,000 in cash assets would have their Accommodation Supplement abated by $5.75 per week because of their savings. The effect of this reduction would be that they would have to use their cash assets to meet their accommodation costs. The gradual reduction in cash assets could leave insufficient savings to cover their funeral costs or other expenses; and
• these asset levels are considerably lower than those set for financial assistance for long-term residential care, which are $6,500 for a single person, $13,000 for couples where both partners are in care and $40,000 for a couple where one partner remains living in the community.

A survey in 1996 found that superannuitants who were eligible for the Accommodation Supplement had a much lower take-up rate, 55%, compared with beneficiaries who had a take up rate of 78%. The take-up rate for eligible older tenants was 74% but it was only 15% for eligible older homeowners. This indicates that there are a large number of older people, especially home owners, who are entitled to the Accommodation Supplement, but who are not receiving it.

Issues Facing Older Home Owners

In 1991, 76% of those aged 65 and over lived in a mortgage-free private dwelling and a further 9% owned their home with a mortgage. The major housing issue facing older home owners is meeting costs such as home maintenance, local authority rates and home alterations.

Older people who have lived in their own home for many years are often faced with major home maintenance. For frail older people or older women living alone, who are unable to do their own repairs, even small house maintenance tasks can be expensive. In some areas, non-governmental organisations, such as Age Concern Councils and the Retired Persons Association, operate volunteer schemes to assist older home owners with minor home repairs and maintenance. However, such assistance is not available nationwide. The costs of, or difficulties associated with, home maintenance can contribute to:

• older people living in substandard or unsatisfactory accommodation; and
• the increased likelihood of a frail older person moving into residential care rather than remaining in the community.

For some older home owners, the values of their properties have increased dramatically over time, but with retirement their incomes have declined. This means that an older person's annual rates bill may be a significant cost for them.

Assistance For Home Owners

Advances for home repairs

Superannuitants can apply for an advance on their New Zealand Superannuation to meet the cost of home maintenance and repairs. The maximum advance is $1,000 however there is discretion to vary this if circumstances warrant. No interest is charged on these advances and the total advance is generally required to be repaid within two years, although this period is negotiable. Older people who are totally reliant on New Zealand Superannuation are likely to find it difficult to repay advances.

Grants for home alterations

Regional health authorities (RHAs) provide grants to older people with disabilities who need to make essential home alterations, for example for hand-rails, ramps, and for kitchen, plumbing, or electrical alterations. The RHA will provide a grant for alterations that cost between $200 and $7,900 with terms and conditions set by the RHA. Grants for alterations that cost more than $7,900 are subject to an income and asset test.

Rates rebate scheme

Low income residential ratepayers can apply to their local authority for a rebate on their annual rates. These applications are assessed against eligibility criteria agreed to by Government, including an income test. Once the rebates have been granted, the local authority applies to the Department of Internal Affairs for reimbursement through the Rates Rebate Scheme. Thirty-three percent of those receiving a rates rebate are single superannuitants living alone.

The number of ratepayers receiving rebates has declined substantially, from 102,000 in 1976 to 3,600 in 1994/95, as the scheme's income limit has not kept pace with increases in wages, benefits and New Zealand Superannuation. During the Department of Internal Affair's annual review of the Rates Rebate Scheme in 1994, it was suggested that the Scheme be abolished. The Senior Citizens Unit was among the government agencies that advocated retaining the scheme until further policy work was undertaken to ensure that government housing assistance was appropriate for older home owners on low incomes. The scheme has been retained, but there have been no changes to the eligibility criteria.

Papakainga loans

The Housing Corporation provides loan finance at commercial rates for people to build on land which has multiple ownership. This loans programme has been utilised by some iwi to build kaumatua flats and is a financing option for older Maori who wish to return to their papakainga when they retire. However, the process of getting approval from the local authority and other owners can be time consuming and complicated. As well, many papakainga sites have no road access and services or are in isolated areas which can make building a house more expensive.

Accommodation Supplement

Home owners with regular housing-related outgoings of more than 30% of their income can apply for the Accommodation Supplement. As most older home owners do not have a mortgage, few will meet this threshold. This means that the Accommodation Supplement is unlikely to provide assistance to many superannuitants with high home maintenance or rates costs.

Home Equity Conversion

Many older home owners, especially those who are mortgage-free and whose only source of income is New Zealand Superannuation, are asset rich but income poor. Home equity conversion provides an opportunity for older people to convert some of the value of their home into income. The Housing Corporation trialled a pilot scheme (Helping Hand Loans) during 1990-91 which allowed older people to convert the equity in their home to help with housing expenses. An evaluation of the scheme found it was satisfying an unmet need in the market at that time however the scheme was not continued.

A private company, Invincible Life Assurance, offers a range of Reverse Annuity Mortgage (RAM) products which allow the homeowner to borrow money in the form of a monthly annuity, based on the age of the homeowner and the value of their house. Investigation of this option by the Advisory Council for Senior Citizens found that the schemes' high compound interest rates resulted in a rapid loss of equity in the home for the client. Some lawyers and real estate companies also offer home equity conversion arrangements.

Older people are generally supportive of the concept of home equity conversion, but hesitant to enter schemes which are promoted by private enterprise. This may be because of overseas experience where the failure of some home equity conversion companies forced participants to sell their homes. For this reason, older people want Government to underwrite home equity conversion schemes or to establish a scheme, through the Housing Corporation, to enable older people to use this option.

Home equity conversion options could provide older home owners with additional income to pay for home repairs and local authority rates. This could assist them to remain in their own homes longer and prevent crisis situations which may result in a move into residential care. It also could reduce applications by superannuitants for supplementary assistance.

The Department of Social Welfare administers government policy which provides for the equity of a person's home to be used towards the cost of residential care services, through registration of a caveat on the home. An extension of this policy to support older people to live as long as possible in their own homes is an option which the Department will consider as part of its strategy to encourage older people to maintain their independence.

There are, however, possible fiscal implications for Government from such a policy. Should older home owners who have taken advantage of a home equity conversion option later require residential care, there could be a reduction in the equity of their home which may be required to meet the cost of residential care. Conversely, keeping up the value of the home through home maintenance can protect the value of the asset. In conclusion, given that the percentage of older people requiring residential care is small and that it is possible only a small proportion of residents will use home equity conversion, the fiscal risk to Government is likely to be minimal.

Other Types of Housing

Retirement villages

An increasing number of retirement villages are being built by private sector companies. These facilities are promoted as providing security, maintenance, medical backup, and recreational facilities. There is usually a minimum entry age of 55 years and those living in retirement villages are mainly active older people, who require little medical or other outside assistance. Many retirement villages have residential care facilities so that residents can remain in the village if they become frail. Residents pay a market rate for their unit, which is repurchased by the village trust when the owner leaves or dies.

A taskforce was set up by the retirement village industry in 1992 to make recommendations for an ongoing regulatory regime for retirement villages and to increase the protection of the residents. The taskforce has reported to the Securities Commission which is considering its recommendations.

Kaumatua housing

Government assistance for the construction of kaumatua flats was introduced in the 1960's in recognition of the generally poor standard of living accommodation available to older Maori in rural areas. Kaumatua flats were mostly built near marae, and occupied by older people of Maori descent, usually of the local iwi.

In line with the housing reforms, responsibility for these units and their mortgages has been transferred to local marae committees. For many of these properties, the mortgage is equal to the total construction cost of the units and does not reflect the market value of the property. This has placed substantial financial pressures on marae committees. There are a number of criticisms about the design and location of the units. Most of the units have one bedroom which means that there is no room for mokopuna (grandchildren) or caregivers to stay.

Abbeyfield houses

The Abbeyfield concept was developed in the United Kingdom and provides a housing option for older people who are living alone, but do not want to be on their own. Abbeyfield houses accommodate between eight and ten residents each of which has their own bedroom and en-suite. Other facilities are shared and meals are provided by a cook/housekeeper. The house is run by a committee of volunteers from the local community. Two Abbeyfield homes are operating in New Zealand: the first one was built in Nelson in 1992; and a second home was opened in Masterton in 1996. Committees have been established in other centres and planning is underway for more houses. The level of rent is set so that it can be met from the resident's New Zealand Superannuation and Accommodation Supplement payments.

Future Directions

The housing needs of older people are varied and depend on factors such as whether an older person owns their home or lives in rented accommodation and the person's gender, ethnicity, level of income and health status.

Recent changes to housing policy which have seen the removal of government incentives for low income earners and subsidised home loans may result in a future generation of older people who do not have equity in a residential property.

Affordability of housing is a factor for older people on low incomes. Older people have higher costs in other areas, such as health expenses, when compared with younger age groups. In addition, people live on their retirement income for several decades with little opportunity to earn more income. Community organisations report that older people with high housing costs often reduce their expenditure on other essential items such as heating and food in order to meet fixed costs, such as rental payments. This is detrimental to their health and well-being and often precipitates the need for expensive hospital or residential care services.

Older people have an expectation that they will continue to live in their home for as long as it is possible and home support services have been developed to support this expectation. There is an assumption that an older person's home, in which they have lived during their life, will still be safe, affordable and appropriate as they get older.

Present government health policy promotes community care through the provision of home support services. Unless accommodation is appropriate, the provision of home support services will not be enough to ensure a frail older person can remain in their own home. There is a need for other government policies to be developed to support older people to remain in their own home or to move into more appropriate accommodation.

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