Whispered about in retirement village circles, seniors’ rental housing is now a financially proven business model – and will play a key role as the sector moves towards continuum of care.
Historically, rentals have taken the backseat in seniors’ housing.
Many rental village operators went bust in the Global Financial Crisis (GFC) or were bought out by the larger operators.
Rentals a ‘stop-gap’ for sales
For village operators, rentals were a non-existent market up until the GFC. When sales stalled post-2008, village operators looked to rentals to fill vacant units.
When sales stumbled again following the Four Corners investigation into the village sector in 2017, operators again turned to rentals for income.
Now the market is shifting again – house prices and rents are rising and traditional rental options like boarding houses are disappearing.
Most seniors’ projects aimed at the lower end still required a $200,000-plus entry fee.
The fact is rental villages – and retirement villages that offer rental – provide a viable seniors’ housing option for security of tenure, support and lower rent.
At the same time, there is a growing acceptance of the long-term rental model among the next generation of retirees.
Ingenia and Eureka leading the way
The rental model has also been proven to be financially successful.
Early rental villages went out of business as operators looked to cut costs on the village manager, services and the product offering itself.
Ingenia and Eureka – the two dominant players in the rental market – have shown it can deliver high occupancy and steady revenue, developing new products and a customer-centric approach.
And with rentals traditionally attracting an older cohort, the model will benefit as operators look to deliver higher-level services to residents – Ingenia already offers Care Plans in its rental sites.
But there are challenges.
Rentals fall under the Residential Tenancies Act, and some village operators are barred from providing rental housing under the Retirement Village Act.
There are also few Government incentives to encourage the development of new rental villages.
Build-to-rent is set to become an alternative option for retirees looking to stay in city areas too.
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