With an ageing population, the need to provide all kinds of facilities is paramount in today’s world. And the most important thing we need as consumers is a home. By 2023, Retiremove estimates that 1 in 4 people in the Uk will be aged over 65.
And this figure is only set to increase. So, investing in retirement property is worth considering if you are a potential landlord. It’s also worth investing in a retirement property if you are looking to downsize as you get older. In this essential guide, we look at things to consider.
What are retirement homes?
Retirement villages are springing up all across the UK as this trend increases. Retirement villages are generally aimed at people who are over 55 and are considering needing extra care and community living. Getting older brings lots of challenges, but being lonely has a devastating impact on mental health. Retirement villages offer smaller properties, usually without stairs and might be bungalows or flats with elevators with age-related facilities.
As people age, they often look for key things such as a safe community and peace and quiet. Many retirement villages offer facilities such as cafes, pubs, libraries, shops, community centres and restaurants, so there’s no need to leave.
Restrictions around buying a retirement property
There are restrictions around buying a retirement property by definition. Each retirement village will have its own restrictions, so it’s best to shop around. The most common restriction is that you generally have to be at least the minimum age. Or be in a partnership with someone aged 50, 55, 60 or over, depending on the individual community. You don’t actually need to be retired, though, and many people choose to settle in a retirement village long before they might need help.
Many retirement villages offer help, but some don’t, so the support provided is a critical personal choice. Some retirement villages will have restrictions on the amount of time visitors can stay and may be limited to 30 days. And with 59% of households owning a furry friend, you might have to find a retirement village that accepts your dog or cat.
Is buying a retirement flat to live in a good investment?
If you are getting older, a retirement flat can make an excellent investment for you. Many people worry about their property’s value in terms of inheritance. Still, remember you were the one that paid for the mortgage on your property, so you need to think of yourself before an inheritance.
If your property is a large family home in an area with screaming kids, downsizing could be perfect for all the reasons mentioned above. Many older people move into retirement villages to take advantage of less hassle involved in the maintenance of a smaller property to enjoy their retirement more fully with friends and use facilities such as the gym. But many residents will be looking to move into a home with 24-hour care, alarm monitoring and domestic care to avoid moving into a residential care home.
Alternatively, many people find themselves still paying a hefty mortgage every month and may wish to downsize to decrease their outgoings, especially if their income has been reduced. By downsizing, you can become mortgage-free. And even release equity in your home to enjoy holidays and treat yourself and your family.
Is buying a retirement flat to rent a good investment?
As we have mentioned, the demand for retirement properties is increasing along with the ageing population. If you are looking to tap into this market, consider some things. Yes, in many ways, older people make better tenants. Their income is usually stable, so your rent should be paid regularly. In addition, in a retirement village that takes care of external work and offers domestic help, you can be better assured that your property will stay in good condition.
Many people moving into a retirement village are likely to be long-stay tenants as well. However, some may move in and have to move out shortly if they have a health crisis and can no longer care for themselves, even with the care offered.
Retirement homes are not necessarily an excellent investment, though, as they often come with a luxury price tag attached to the services they offer. It’s vital you don’t overpay for the property, and it will likely hold its value, but it won’t increase in value. You also need to check that the lease will allow you to rent the property out. In addition, retirement villages usually charge a ground rent and service charge due to the facilities and upkeep they provide.
This can make it tricky to rent out. Those on a state pension will be unable to afford all those costs, decreasing demand. And if you absorb those costs yourself as a landlord, you could very well be wasting your time on a property that doesn’t increase in value, and you are not making a monthly profit from. In terms of reselling the property, you need to make sure you contact a specialist estate agent to achieve its highest possible price.
Investing in retirement villages: Things to Remember
In this essential guide, we covered the basics of retirement villages:
Retirement villages are communities of retirement homes that are age-restricted to provide the best possible standard of living for older people. They have facilities such as companionship, domestic help, pubs, restaurants and libraries. There may also be other restrictions aside from age, such as limited visiting and no pets.
If you are elderly, you could benefit from downsizing and releasing equity in your home and living in a community that offers friendship and support. However, if you are buying to invest, there are better opportunities. Retirement properties can struggle to hold their value, and if you wish to rent, you will probably need to find a tenant that can also afford the ground rent and service charge. However, you could benefit from long-stay tenants, prompt and regular payment and a well-maintained property.
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