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28 September, 2017
While the plight of first-time buyers regularly makes news headlines, the plight of final-home buyers has somehow been largely overlooked, in spite of the fact that it is common knowledge that the demographics of the UK are shifting towards an ageing population.
Perhaps it’s because there’s an assumption that retirement buyers are looking for much the same property as first-time buyers and there’s certainly a degree of logic to this, both sets of buyers are likely to be looking for smaller homes, which are easy to maintain, but there are many differences between the two sets of buyers.
Young people often want to move, older people may be quite happy where they are
Buying your first home is generally a major milestone in a person’s life. It marks independence and adulthood. Buying the home in which you will raise your children can also be an emotional moment. This is the place you will fill with happy memories. When children grow up, as they do, they go off to build their own nests and their parents may be aware of the theoretical advantages of downsizing, but may only make the move to do so if they see an actual emotional or practical benefit as well as a financial one.
This means that older buyers need to be tempted with desirable and appropriate accommodation before they will seriously consider a move from their current home. Because of this, developing attractive retirement properties, such as care home investments, is vital to the long-term health of the UK property market and therefore the UK economy, as it frees up family homes for younger people who want to raise their own families.
Location is key
Perhaps one of the issues which has hampered the effective development of retirement properties is that developers have looked at where older people are now and assumed that this is where they will want to be in their retirement. This is another assumption which makes sense on one level but is still often flawed.
Working adults often need to travel to a place of employment and usually buy their homes with this journey in mind. Retired adults may still want to be in the general vicinity of their existing home so as to have easy access to children and grandchildren, but can be quite happy to move out of cities and into places they previously enjoyed as holiday destinations. Coastal locations such as the Norfolk Broads, the “English Riviera” and the Isle of Wight are particularly desirable as are inland locations in pleasant countryside.
Older people buy with an eye to their children
Another possible reason why older people may find themselves reluctant to move into designated retirement accommodation is because much of it is sold on a “lifetime lease” basis, which essentially means that when the buyer dies, the leases passes back to the investment company, whereas with a “normal” purchase, it would be passed on to beneficiaries. Fortunately, there are some retirement developments which have standard leases and which are therefore much more attractive both to private buyer and to investors. Furthermore, if retirement developments are classed as commercial property, as is the case with care homes, then investors have all the benefits of the demand for rental accommodation without the increasing complexity of navigating the standard, residential market for buy-to-let property investments.
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