James Adams, head of transactions, My Future Living
The demand for retirement housing is on the rise, creating new opportunities for property investors seeking stability and profitability.
According to the Office for National Statistics (ONS), the number of older people in the UK is projected to increase significantly over the next 15 years.
Other data shows that in the last 40 years, the number of people aged 50 and over in England has increased by over 6.8 million (a 47% increase), and the number aged 65 and over has increased by over 3.5 million (a 52% increase). Over 10 million people are currently aged 65 and over, making up 18% of the population.
These demographic shifts are likely to further boost demand for retirement housing, especially retirement apartments within established communities, which are affordable and more manageable in size for people as they age.
One often overlooked point is that retirement properties with tenants in situ can be a smart investment choice.
Investments with minimal fuss
This insight is supported by new analysis of buy to let properties, by Lomond lettings agency group, which shows that properties with tenants in situ make good investments. However, they are rare, accounting for just 2.8% of total sales listings. However, those who can locate a suitable investment opportunity could save as much as 25% on the market value of their investment.
A property with a tenant in situ is a way to invest in the rental market with minimal fuss. With a tenant already paying rent, investors can secure a guaranteed rental income from the start. Additionally, properties with tenants offer peace of mind, as tenants have been vetted by a letting agent, and the previous landlord has taken care of the practical details associated with a rental property, such as compliance certificates and gas safety.
The retirement housing market is uniquely positioned for investors to benefit from long term tenants in situ, providing immediate rental income while also future proofing their investment due to the thriving nature of the retirement rentals sector.
People are living longer and healthier lives. Where they live in retirement is a major consideration, and for many, renting in a retirement community is a popular choice. There has also been a growing trend for older people to downsize – or right size to a home that better suits their needs – and rent in a retirement community over the past five years.
Not only can people use the capital from the sale of home to help fund retirement, but they also no longer have to worry about the costs and upkeep of a home. The cost-of-living crisis affecting many older people has further prompted retirees to make the decision to downsize and rent.
This is also part of wider shift in the UK towards renting.
Estate agency, Hampton’s points to the landscape of British homeownership steadily shifting and predicts the number of over 65 rented households to pass 1m by 2033.
What does this mean for property investors?
With an ageing population and renting in retirement becoming more appealing, investors buying apartments in retirement communities could make substantial gains whilst having the additional reassurance of older tenants that are likely to stay long term.
My Future Living properties are designed for independent living but with the safety of living in a development with a 24-hour emergency alarm system in each apartment and an onsite manager on duty during the day.
Apartments are in retirement developments in desirable locations and close to amenities and transport. They offer tenants an attractive lifestyle where they are part of a friendly community where residents can get together to enjoy activities and events.
The icing on the cake for tenants and investors is that most rental apartments in retirement developments come with assured ‘lifetime’ tenancies, which mean people never need to move again if they keep to the terms of their agreement. This is often the biggest attraction for older tenants looking to rent, especially those renting for the first time.
For investors, this means that rental income will be secure for many years with fewer gaps in tenancies. Even if a tenant decides to leave, the demand for retirement properties is increasing, making it unlikely for properties to remain empty for long.
To conclude
As the population ages and the demand for retirement housing increases, investing in a retirement apartment with tenants in situ can be a secure and profitable opportunity.
