A new investment market is emerging in the rental property sector as more retired people are looking to sell their homes and become tenants. British pensioners are believed to own about £1 trillion worth of property between them but many are struggling to pay the bills.
Although they could look at equity release from their home, this still means that they could be struggling to pay the bills for a large family home or to finance any repairs. Another answer could be to release the money in their property in an entirely different way – by selling up and moving to a purpose-built retirement unit.
They should actually find that they are better off by renting as they have the profit from their property to help them with everyday expenses. This is also likely to be a growing market because of the ageing population in the UK. If house prices continue to grow at the rate they have over the past few years, people coming up to retirement age will also be in the situation of having a considerable asset which they can cash in to enjoy financial freedom.
Girlings Retirement Rentals has noticed an increase in the number of people who want to get off the property ladder because they need to downsize. It is also a great opportunity to move to an area where they have always dreamed of living. The family home may have been bought because it was convenient for work but releasing the capital in that property means that a retiree can move wherever they please. Many would downsize if they could find the type of property and facilities they require.
Not surprisingly, many people want to move to the southern coast. The most popular areas, according to Girlings, are Bournemouth, Poole, Ferndown, Brighton and Weymouth followed by Bristol, Clevedon, Great Yarmouth, Paignton and Reading.
At present the demand for quality retirement villages or complexes is outstripping supply so for the discerning investor the time is ripe to move into this market.
The choice of properties is endless as it could involve remodelling a magnificent old manor house for retirement housing or creating a purpose-built complex with the amenities of a quality hotel such as a pool, gym, gardens, restaurant and bar, for example.
These complexes can also involve other communal areas such as a bowling green, swimming pool or croquet lawn to encourage the tenants to integrate. Older people would have the peace of mind of a 24-hour emergency response service or a concierge so they have security while remaining independent.
Clearly costs would need to be carefully examined to ensure that the rents are affordable and that buildings insurance, maintenance and repair of communal areas, roof and gardens can be covered. Retirement villages and complexes could well be a sound investment for landlords to provide quality housing for a discerning group who are cash rich after selling up and who are thus rather less risky than younger tenants.