A new survey predicts a significant rise in the number of older people opting to sell their homes and rent a “senior living rental property”. Who might live in a house like this… and what are the pros and cons of simply renting a mainstream house in later life?
By Tony Watts OBE
Over the last 30 years as a journalist and writer, I’ve focussed on two sectors in particular: later life and property. And the neat intersection of those sectors is what is variously called “retirement properties”, “later life living” and “retirement communities” – although other handles are available.
The big player in the market is McCarthy and Stone, but there are some other operators too, such as Abbeyfield, Richmond Villages and Audley. Major institutions such as Legal & General have recently put their hat in the ring with “Inspired Villages”.
Needless to say, these properties will appeal to some people more than others – but they do fill a niche, especially for anybody keen to be living in a relatively safe and secure environment with amenities and services on hand, and neighbours that almost certainly won’t be playing rap music late into the night…
Curiously – at least to my mind – after something of a boom period in the late 1980s, the market for these units has remained relatively low when you compare it to the rising number of older people: only around 5,000 are built for sale each year.
But there is another market that could – say the experts – really accelerate in the next few years. According to Knight Frank, the number of private senior living rental properties in the UK is forecast to increase by 160% in the next five years, from almost 5,000 currently to more than 13,000 by 2024.
Pipeline data also suggest that a further 8,500 specialist senior living rental units will be built over this timeframe, provided by “housing with care” operators.
This is relatively chicken feed compared to markets on other countries where renting is far more common anyway, and the seniors market for many specialist products and services is (forgive the pun) more mature.
So why might you consider renting in a retirement development? Importantly, the lifestyle would have to appeal to you, and the extra cost over renting traditional housing because of the additional services would have to be worth it. But:
- It allows you to free up equity in your home, which you can then invest and draw down.
- It can help with IHT for owners of more expensive properties.
- You can move to a place of your choice without long-term commitments in case you later need to move to specialist accommodation or a care home.
- You can move to a location of your choice to be near family or to a nicer environment – again without long term commitment or costs.
- You might well want to move to a location where services and facilities are all to hand.
What is the other option?
What the Knight Frank survey doesn’t cover is the massive potential for older people to simply opt to rent mainstream housing – especially the rising numbers of “Build to Rent” or “Private Rented Sector” schemes. All of the benefits above apply, except you are not living in accommodation purely for the over 55s… which you might see as a negative or positive.
One option if your existing home is too large / tying you down / proving difficult to maintain is to rent that out… and rent somewhere more to your liking. That means you can retain your property if you want to pass that onto your family, and/or keep all your future options open.
Obviously when you rent, issues like lease security will be important: no one wants the prospect of being cast out on their ears. But long leases are available with many properties – and even “lifetime tenancies” with specialist rental operators like Girlings.
It might seem a bold move to leave one’s family home, but if you are at the point where you want to consider ALL your options as you plan ahead, then it’s something to put into the mix.
How might your finances work out into the future?
That’s easily answered. Simply feed all of the figures into your RetireEasy LifePlan and play out some different scenarios. You’ll be able to quickly see whether the sums add up…