I have written before about the prospect that a growing number of older people will be living in rental accommodation in the future – based on a declining trend in home ownership.
Another recent blog was about the growth in retirement villages as a housing option, albeit one which is largely open only to people who have been home owners.
These facts made me wonder about the prospect of retirement villages offering rental accommodation. I enquired of the Retirement Villages Association and, thanks to the Executive Director John Collyns, was told that there are currently 52 villages (members of the RVA), providing 510 rental units in total. About half have less than 10 such units. Both not-for-profit and commercial villages are represented in the list, but the balance is towards the former. Only Oceania, among the top six operators is reported to have rentals. The leaders in the not-for-profit sector are Masonic Villages and Trusts, the Selwyn Foundation and Presbyterian Support/Enliven.
Villages with rental units are spread throughout the country, but their distribution mirrors that of retirement villages in general, with a concentration in Northland, Auckland, Waikato and the Bay of Plenty. Only one in five villages with rentals are in the South Island, mainly in Marlborough and Canterbury.
When I tried to find out more about rental units in villages, starting with those reported as having more than 20 units, I found a surprising lack of information. Mostly this option was not mentioned on their web-sites, even though the RVA data said rentals existed.
I am wondering why.
Is it because the potential demand is growing and could be so high that advertising is not necessary or would raise expectations that cannot be met?
Is there some feeling that renters are somehow “second class” (which is a long-held prejudice in New Zealand)? And that having rented accommodation would somehow detract from the high-life image which many retirement villages try to project?
Is there a question of the financial viability of rental accommodation, especially for villages in the commercial sector which need to make a profit for shareholders? The cost of land and construction is high to cover by reasonable rents. Operators have told the RVA that unless there is a grant or similar benefit from the government or local body, such as access to land, building rentals from scratch is uneconomic.
It certainly appears that the community trusts and charitable organisations are looking more favourably towards incorporating rental options into their offerings. Their mandate is often to house people who are not so well off as the usual RV cohort. Quotes from their web-sites:
“usually for people who are unable financially to provide for their own house purchase.” Aparangi Village in Te Kauwhata.
“Eligibility – Older than 65 years with less than $140 000 in total assets. “
Tamahere Eventide Retirement Village in Hamilton.
Retirement villages in the not-for-profit sector have often received assistance from the public sector or from churches. For example Tamahere Village, with assistance from the state, was able to build a number of quality units and rent them out at a rate less than the average market rental in the Waikato. (It is also a Methodist Church outreach project).
HBH Stevenson Village, Manukau, began as a joint venture between Howick Returned Services Association and Sir William and Lady Stevenson. It is now “a service of Howick Baptist Healthcare”. This village offers low cost rentals for “elderly people on lower incomes. “ Their eligibility criteria -“independent NZ Citizens over 60 years with an emphasis on people who have served the country.”
Several Masonic villages have rental options, including Horowhenua Masonic Village, Levin; Wairarapa Masonic Village, Masterton; Te Awahou Masonic Village, Foxton and Masonic Court, Palmerston North.
“The decision whether buying or renting is best for you depends on your circumstances. For example, moving into a retirement community may be an interim step or you may wish to retain a capital reserve that will keep on earning for you. If this is the case, renting may be the best option.”
One of the things to bear in mind with religious and welfare organisations is that they have significant tax free advantages by being charities, being able to attract bequests and often not having to pay their trust boards etc. Even so they still don’t seem to be very enthusiastic about getting into the rental space.
This picture is mirrored in Australia. Some traditional retirement villages provide a number of units available for rent. These are limited are not advertised in most cases. Almost all are owned by not- for-profit organisations and they provide the rental units as part of their mission to provide ‘affordable housing’ for the less well off.
There are also single purpose rental villages. These were popular amongst property developers around 1995 to 2005. But virtually none have been built since because of the cost and a low potential return.
There are apparently barriers to the development of rental housing in retirement villages, even though they seem to be a way of extending housing options for older people. If one was looking for such accommodation, it might be a daunting prospect.