Many Registered Providers, Care Home Operators and other building owners have been approached to assist in the response to the COVID-19 pandemic in various ways including permitting use of their buildings and facilities.
This may be as an overflow healthcare facility or more nuanced such as to provide varying degrees of step-down accommodation for those people who are well enough to leave a hospital environment but who are not yet well enough to return home or who may require new support packages to be assessed and put in place.
Step-down accommodation is not a new concept but the backdrop to new requirements is that as the COVID-19 emergency arose HM Government and NHS guidance identified that during the emergency period a “discharge to assess model” should be adopted in England to encourage early discharge with assessment of further need being carried out in non-hospital environments.
Interestingly, guidance indicated that of those discharged to short term reablement/rehabilitation pathways approximately 35% are likely to require long term care at home or placement in a 24 hour residential or nursing setting. To add to this, the Coronavirus Act 2020 brought in changes for social care provision to ease the burden on local authorities in fulfilling their duties under the Care Act 2014.
Whilst these provisions are temporary and will be reviewed some of the effects could be lasting and modify the approaches taken to discharge of older people from acute settings. In negotiating temporary accommodation proposals during the COVID-19 emergency many issues are being considered at pace and with pragmatism; some may find their desire to help and contribute to solutions overriding protections which would ordinarily be sought in more normal times. This section of the Care Brief sets out some of the core considerations for temporary use of buildings and accommodation and recommendations for successful arrangements. Devised with the COVID-19 situation in mind these considerations and recommendations equally apply to other temporary care facilities.
Does the building practically lend itself to the purpose?
If adaptations or alterations are required to a building, both parties need to agree what needs to be done, by who and when.
A licence to carry out works may be required and the usual allocation of risk and responsibilities during the carrying out of the works need to be considered along with whether those alterations and adaptions should remain once the purpose/use has come to an end. For any new buildings, the impact on existing warranty packages may need to be assessed.
The planning status of changes of use and development will require consideration – depending on the identity of the developer the proposed works may even qualify as being carried out under the coronavirus emergency permitted development rights introduced in April 2020.
What are the terms of occupation? Lease or Licence?
The projected length of arrangements will be important in considering whether occupation under lease or licence is appropriate. Landlords will need to consider the application of the Landlord and Tenant Act 1954 and whether security of tenure may be acquired by the tenant and consider contracting out of the Act.
If there is a head lease in place regard to superior landlord consents/approvals will need to be had. Lender consent may also be required.
In terms of rent levels for short term arrangements an all-inclusive rent or licence fee may be appropriate regard to any service provision may be necessary; who is responsible, the terms and costs. The usual roles and responsibilities as in any lease/ licence situation will need to be allocated such as responsibility for repairs, alienation, insurance and exercise of any rights and reservation of rights.
We would recommend heads of terms being drawn up at an early stage to crystallise each party’s requirements and establish a common understanding of the terms. This will save time and expense to conclude any transaction and help identify how any such arrangement should be documented. Make allowances for any due diligence necessary and if time pressures are too great the use of indemnities or other mechanisms to deal with risks may be an option.
What is temporary?
Taking care that an intended temporary arrangement doesn’t in reality become long term arrangement with unintended consequences should be borne in mind. In the case of COVID-19 the situation is evolving and predicted timescales elongating. Ensuring there are exit strategies such as break rights and notice periods with agreed handback standards could be important for both parties. The practicalities and cost of remobilisation for some building operators and owners may also be a concern and may need to be factored in to the level of rent or fees charged.
Who is providing care?
In most proposals for temporary arrangements it is the NHS Trust or the local authority who will procure the provision of care services to the individuals expected to occupy the property. However, where placements are being made into care homes then the care home operator will need to consider the impact on other residents and employees and the suitability of care needs and impacts of changing needs over time.
How do proposals impact existing property arrangements?
Target accommodation/buildings may already be occupied in whole or part by tenants or licensees. Where occupied an assessment will be needed of the terms of their occupation, re-gaining possession of the property, perhaps with considerations for alternative accommodation.
Registered Providers may have nomination arrangements in place with local authorities, NHS Trusts or other institutions which require consideration and possibly suspension, variation or termination. Care Providers may have contracts with local authorities which need varying or adapting to the circumstances. Target accommodation/buildings may have existing third party contracts which need to be suspended, varied or terminated. If accommodation is already being occupied there will undoubtedly be staffing considerations and the cost of suspension of any business activities to be factored in.
Should formalities be relaxed?
In an emergency situation where parties are seeking to be co-operative and collaborative parties should also be advised of any rights they may be giving up or breaches they may be committing (inadvertently or otherwise) in forming a commercial or even benevolent view.
Situations have a habit of changing and ensuring there is clarity of arrangements between parties can be very helpful later down the line. It’s not necessarily fatal if formalities have already been compromised but you may wish to regularise a position sooner rather than later whilst relationships remain good.
There is not necessarily a need to compromise on the practicalities of documenting arrangements. For example, only leases for a term of more 7 years require registration at the Land Registry and leases of 3 years or less may be able to be signed under hand rather than executed by deed so if execution is thought to be a barrier to a lease this may not in fact be the case and a lease may serve both parties better than a licence arrangement.
In summary existing buildings and accommodation (both care and non-care) can facilitate temporary health and other care needs and also potentially provide the owners of those buildings with an income stream which may be helpful for void accommodation. Four takeaway recommendations for these arrangements are:
- Agree heads of terms
- Assess the impact on existing arrangements
- Consider time and costs of facilitating arrangements
- Document arrangements to avoid any disputes later
With the news spotlight moving from hospitals to care homes in the midst of this crisis the fallout of the COVID-19 emergency may be that integration of health care and housing is given greater and well-deserved attention.
For more information in relation to this article or other property related issues you may have, please contact Caroline Mostowfi.
