Our population is aging. The number of New Zealanders aged over 65 today is 756,000 or 15% of the population, though by 2038 that number is projected to be 1,340,000 (21% of the population).
There is more and more awareness of how retirement village leasehold properties don’t provide much of an investment return.
The Retirement Commissioner pointed out in March 2017 that people who choose to live in a retirement village usually pay for the move by selling their family home. That’s not a great thing to do with your biggest asset. While retirement villages tend to come with high quality care and nursing for the resident, residents don’t own the units they live in, can’t sell the unit and can’t sell on their own occupation rights without permission. Large deferred management fees, rent, utilities and other fees mean the village operator keeps the profit.
On August 7, Retirement Commissioner Diane Maxwell pointed to the Abbeyfield model of retirement living as a part-solution.
The Commission for Financial Capability has found 70 per cent of people over the age of 65 own their home without a mortgage. A solution to balancing comfort and income could be to rent your house out while living in a smaller, cheaper unit – perhaps Abbeyfield, which comes with minimal costs.
Abbeyfield rent tends to be less than NZ superannuation payments (currently $801.74 after tax, fortnightly, if you’re single, or $616.72 fortnightly per person if in a couple).
A great right-sizing solution is to talk to the folks at Rental Experts and understand how profitable renting your house out can be.
Leaders in getting the most value out of each property, the Rental Experts team will advise on ways to accentuate features in the house to maximise the asset’s worth.