Why more retirees are opting to rent – and not buy

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Why more retirees are opting to rent – and not buy

News : Telegraph

The Government’s Housing White Paper released in February flagged the need to explore new ways to house our ageing population. By 2020 there will be 1.4million more people over the age of 70 than in 2015, according to the Office for National Statistics. Considering the shortage of new homes in the UK, there is a need for fresh thinking on how to remove the barriers to downsizing in order to free up more family housing.

What new approaches are there? At a time when we are undergoing a major cultural shift from home ownership to renting, one way is to provide more attractive rental options for retirees.

“The build-to-rent PRS [private rental schemes] model is well established and well regarded across the US as it’s a popular option for consumers wanting mobility, freedom from mortgage debt, and good on-site maintenance and management,” says Jonathan Ivory, managing director of Atlas Residential, one of the largest operators of PRS in the US and with two new sites in the UK.

“We are going to offer tenancies of up to three years in schemes that have the feel of serviced hotel suites with amenities that cater for a wide range of people, from students to retirees. It’s a myth that it’s only the millennial generation that rents property.”

Ivory says that Atlas’ US schemes – 18,000 units across 13 states – offer a mix of demographics, depending on the locality, including a lot of downsizing baby boomers who want to move back into the city from the suburbs, or seek an urban pied-à-terre.

In the UK, one-bedroom apartments in Atlas’ new Southampton and Birmingham city-centre schemes cost from £759 per month. Shared amenities include lounges with Wi-Fi, coffee stations, cinemas and gyms.

Jonathan Clarke, head of residential at the architecture firm Woods Bagot, agrees that we should take inspiration from the US in providing for older people who will live longer and are “last-time renters”.

We should take inspiration from the US in providing for older people who will live longer and are ‘last-time renters’

“Over the next 10 years we will be moving away from the homeownership model at both ends of the life cycle: millennials because they can’t afford to own, and at the other [there are] a growing number of empty nesters who want to live like millennials with greater freedom and an easier way of life,” he says. “These last-time renters can also release equity by selling their family home – for travel, or helping their children.”

Woods Bagot has designed schemes for retirement developer PegasusLife, which has since October started offering retirees the option to rent, not buy, their retirement properties.

“There’s been a cultural shift. People are renting as an extended ‘try before you buy’, so they can overcome the emotional uncertainty of selling up the family home,” says Lorena Brown, sales and marketing director. “But there are also those downsizing via a rental so they can let their old home (perhaps to their children), providing a steady income that supports their new lifestyle. It means they can protect what is often their main financial asset.”

Only 30 per cent of any scheme will be offered to renters. At the selfcontained Steepleton village there are 114 units, with one-beds renting for £1,933 a month, or for sale for £346,950. There are also available homes to rent at PegasusLife’s Malt Yard in Suffolk and the new Marina Gardens scheme in Somerset.

Lifestyle and financial reasons are why some retirees have rented for some years through Girlings, the only retirement housing provider in the private sector to provide the security of lifelong (assured) tenancy agreements. Girlings offers 2,500 homes in 600 developments across the UK for the 55-plus market, with the average rent for a one-bedroom flat at £720 per month.

“We have some tenants who want to spend their money on exotic travel, and maybe lock-and-leave their home every winter when they head to Spain in their camper van, while others want to gift money to their children, or don’t want to leave them the hassle (and heartache) of selling the family home when they die,” says Caroline Hull, executive manager of Girlings.

“The benefits over renting in a non-retirement development include security of tenure, the lack of hassle of having to pay ground rent and service charges, and rent increases capped at six per cent per annum.”

These rental schemes are not the only examples of pioneering solutions for retirement property. At the New Ground co-housing scheme by architects firm Pollard Thomas Edwards in Barnet, north London, a group of 20 older women sought a radically different approach. On the site of a former convent there are 25 private brick mews-style apartments around a garden and craft shed, with residents aged from 50 to 87.

These co-living complexes – a cross between student housing and hotels, for residents looking to share both facilities and philosophies with their neighbours – are catching on elsewhere in the retirement community. The architects at Pollard Thomas Edwards are working with Tonic Housing to create the UK’s first residential space dedicated to LGBT older living.

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