With its amazing scenery, hours of sunshine and laid-back lifestyle focussed on wellbeing, it’s easy to see why Australia has attracted many visitors and new residents. But what about those in their later years? Are care homes in Australia meeting the growing needs of its elderly population and what can the UK learn from this market?

The current trend for the ‘aged care’ market in Australia is delivering a continuum of care across the sector. This incorporates the provision of independent living units, which sit alongside the more traditional form of care home, to intermediate serviced apartments for those still able to live independently but require frequent assistance and care provision. 

By contrast, the UK market is still fairly segregated in the way we view aged care and the options available for those in need of care, or looking to move into housing with care. The majority of those over 75 will either be looking to move for personal reasons, to be closer to family, due to the loss of a spouse or a decline in health.  For many, moving into a care home may be the only option they believe is available to them. 

We’re seeing a shift in the UK market, with more operators beginning to provide housing with care, albeit the care element itself is typically not the overriding selling point for the product, with operators focusing more on the benefits that come with being part of a wider community. Care within these schemes is generally more discrete in comparison with the Australian model.

The aged care fee structure is another area that highlights a fundamental difference between the UK and Australia. In Australia there are three charges: a basic daily fee (up to approximately $51/£26 per day), a means-tested care fee (up to $252/£130 per day), and an accommodation fee, which is determined by the individual operator based on market value. In main town centres this price can vary between $400,000/£207,000 and $1 million/£518,000, for a large single bedroom with a wet room en-suite.

The accommodation charge is either a daily fee (daily interest charged) or paid upfront via a Refundable Accommodation Deposit (RAD), which is fully refundable when the resident leaves the home. There are, however, restrictions around how providers can use the RAD, including for capital expenditure (capex) on the home, providing flexible care as needed, investment into particular financial products, reimbursing refundable deposits and repaying debt associated with capex.  

In the UK, an inclusive fee is paid weekly which, depending on the local market, quality of the home, and level of residents’ needs, typically varies from £800 to over £2,500 per week. For those requiring longer term care, these fees quickly add up. Under the Australian RAD model, having the security that the deposit will go back to the family or executors can give residents an element of comfort. 

With the UK over-65 population predicted to increase to 17 million by 2038, we are inevitably going to see a shift in housing models to support the increasing needs of an ageing demographic. To date, models have predominantly focused on the upper part of the market with limited provision in the growing mid-market. Developing an all-encompassing care product, as seen in Australia, could be seen as an alternative solution to the existing perception of aged care in the UK.

Further information

Contact Savills Retirement Living