Are you asking yourself the question 'Can I buy a retirement property for my parents?'
A retirement property could be a way of supporting your parents in old age, with a safe and comfortable home.
But what are the costs of buying a retirement property and is it a good investment?
In this article you’ll learn about what’s available and whether buying a retirement property for your parents is a good idea.
Here’s a summary of what we’ll cover:
- Retirement properties are purpose built homes within a safe and secure community, catering to older people.
- You can buy a property for your parents, but they must be over a certain age to live there – usually 60 and over.
- Whether it’s sheltered housing or a grand retirement village, the features of the property depend on the development.
- The costs of buying and maintaining a retirement property make renting a popular option for older individuals and couples.
What is a retirement property?
A retirement property is a purpose built property, located within a community of other homes and amenities for older people.
The property can be a house, flat or bungalow that is self-contained, though there may be communal spaces.
These properties offer safe, comfortable and accessible options for older people to live well in retirement, staying active and connected.
While allowing people to optimise their later years by living independently in a supportive peer community.
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Who is a retirement property suitable for?
Retirement properties are available to people above a certain age, normally over 60s, though some are open to younger residents.
This can be confusing, as while they are marketed as retirement communities, some people living there may not have actually retired yet.
You can move in on your own or with your partner, and choose from a range of properties based on your needs and budget.
Types of retirement property
Sheltered housing
Sheltered housing is the most basic form of retirement property that caters specifically to older people.
A community of people live together in self contained apartments, with the added assurance of a warden who manages the site.
Unlike other types of retirement properties, sheltered housing isn’t regulated by the Care Quality Commission (CQC).
This type of property is more commonly rented through the local council or housing association.
Why choose sheltered housing?
Sheltered housing could be a good option for someone looking to downsize in a safe and secure community.
While residents are likely to live in flats in sheltered housing schemes, it’s different from living in a regular apartment block.
When looking to buy a retirement property for elderly parents, prospective buyers should expect a similar process to buying a normal leasehold property.
We’ll look at the implications of buying a retirement property (as opposed to renting one) later in this article.
Assisted living
Assisted living or extra care housing may be more suitable for people with care needs than basic sheltered housing.
This is because as well as the self-contained housing arrangements, residents also have access to care staff.
They provide support with basic care needs such as washing and dressing or help with medication and exercise.
This helps people live independently without the need for moving into a care home if living alone is not viable.
Finding the right place for your loved one
Unlike basic sheltered housing for elderly people, assisted living is regulated by the CQC.
If you’re wondering, ‘what is the CQC?’, you can find more information about their regulation and ratings in our article.
For anyone thinking ‘Can I buy a retirement property for my parents?’ assisted living could be a good option.
But you’ll need to make sure that the facility can provide the care they need and is somewhere they feel comfortable living.
How does assisted living promote independence?
Assisted living is the favourite retirement housing option for individuals and couples over 60 years old.
This is because they get all the benefits of independent living with the added security that help is close by if it’s needed.
They can also get involved in events in their wider community if they wish to, which can be a great way for people to cope with loneliness.
Living like this inspires a greater sense of independence and confidence than they might have had at home.
Retirement villages
Retirement villages offer a more luxurious way of living for older people than site managed sheltered housing.
These villages often consist of different size properties from apartments to bungalows and houses.
A very desirable feature of the retirement village is the communal facilities and spaces for residents to use for fitness, events or socials.
Plus, many run an active social calendar for residents as a way of building community and living well in later life.
Is care available?
Retirement villages understand the fact that, while living life to the full, their residents may be diagnosed with and managing health concerns.
While they aren’t necessarily equipped to deal with complex health conditions, there is usually provision for an onsite elderly carer.
Like assisted living, residents have access to care staff to help them with daily tasks and perhaps even grocery shopping or similar too.
Can I buy a retirement property for my parents?
Yes, it is certainly possible to buy a retirement property for your parents to spend their later years in.
There aren’t any limits on the age of the purchaser, as long as the people living there meet the minimum age terms (55 or 60+).
They’ll live in a purpose built property that is easier for them to manage as well as belonging to a peer community.
So if you can afford to purchase for your parents – great – but ensure you understand all the costs.
How much does it cost to buy a retirement property for my parents?
Property prices will, of course, vary depending on the location, size and what facilities are available.
But one major consideration for anyone looking to buy a retirement property is that cash is king.
Very few lenders offer mortgages for retirement homes, due to the restrictions on the properties, though it’s not impossible to find one.
Prices for a one bedroom apartment start around £200,000 and can hit up to £700,000 in luxury developments around London.
Additional costs that come with buying a retirement property
Aside from the price of the property there are some financial considerations that you should definitely know before making a purchase.
- Admin fees at the point of purchase
- Ground rent for leaseholders
- Service charge – potentially up to £1000 a month
- Exit fees when the property is sold normally 10% to 30% of the purchase price
- Usual utility costs
- Care costs for the services used
If you’re thinking about buying for your parents, include these fees in your calculations when deciding whether to buy or rent.
Do retirement properties retain their value?
Unfortunately, it seems that retirement properties often do not retain their value in the current property market.
If you wish to resell a retirement property some years down the line, you may find that the property has decreased in value.
Plus, due to the age restrictions on the property, there is a limited market of buyers looking to buy in a certain location or complex.
This can make resale a rather tricky process, which may take years after the original decision to sell.
Think about the costs
When your parents move out or pass away, you are still responsible for service charges associated with the property.
These can easily mount up and be a real financial burden to families left to deal with an empty retirement property.
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Is renting a better option?
As we’ve seen there are multiple extra charges associated with buying a retirement property for your parents.
This is why many people looking to move into a retirement home choose to rent.
In fact, most retirement developments offer a rental option, as well as some part-buy-part rent schemes.
As a renter, you’ll have access to the same features and on-site facilities as buyers, without the stress of the buying fees.
Flexibility and Security
Renting offers greater flexibility if you don’t wish to continue living there, as you can move out and find another place.
Yet it also offers the security that you won’t be asked to move out by your landlord in a regular rental.
Easy to manage
You aren’t responsible for management and repairs like owners are, instead the landlord (or site team) takes on the responsibility of getting things fixed.
Places can also make managing payments easier by combining rent, service charge and ground rent into one monthly bill.
This can support older people with financial management, which can become confusing especially when all done online.
Do ensure that you or your parents have a breakdown of monthly costs, including utility bills to better understand monthly outgoings.
If you found this guide useful then you might like to check out these guides on:
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