Can A Young Person Buy a Retirement Property?
Whether retirement is many years away yet, or it’s just around the corner, buying a retirement property could well be high on the agenda. It may not be quite as straightforward as you thought though. Sure, once you have called it a day with work, and have reached the age you can retire, it’s simple enough to secure a home in a beautiful retirement village and live close to friends and other people similar in age. What if you still have twenty or thirty years of work ahead of you? Could you still buy what is technically classed as a retirement home? In a word, yes. You just won’t be able to live there yet. This alone should lead you to think, that whilst it’s possible to buy one, it’s probably not worth it. However, purchasing a retirement home, while you are young, could be a worthwhile investment too.
In this edition of our blog, we look at whether a young person can buy a retirement property and what they can do with it.
What is a retirement property?
A retirement property is a house or flat specifically aimed at people aged over 60, although there are some properties made available to those aged 55 or over. Quite often, and in most cases, they are built as part of a “retirement village” where all properties in the area are built to
be bought as retirement homes.
Available as a house, a flat or a bungalow, a retirement property helps to enable a community of similar-aged people all live close to each other. They can be bought outright or as part of a shared ownership scheme. An incentive of the shared ownership scheme is that whilst you cannot buy more than 75% of the home, once you do reach that level, no rent will be owed on the remaining 25%. Unfortunately, to buy outright though isn’t always easy, unless the original property was sold to a cash house buyer, the funds may not be available to secure an outright purchase. This is because mortgages are often harder to acquire once you are over sixty.
I’m not ready to retire, can I buy a retirement property?
No matter your age, as long as you are over 18, can secure a mortgage and afford the payments, you can purchase a retirement property. You just won’t be able to live there yet. This is due to the criteria set out by the owners of the retirement properties. In some cases, you may even find that the owners of the retirement properties have specific conditions in place that restrict people under the age of 50-60 from purchasing a property from them.
Could I buy and rent out a retirement property I bought before I need to live there?
In many cases, yes. You can buy the retirement property and rent it out. You will just need to make sure that the people renting it from you are of the required age to be living within a retirement property and that the freeholder permits you to rent out the property. Once agreed, the freeholder may need a copy of your rental agreement and charge you a management fee to help cover the costs of any repairs and maintenance the property may need during the tenancy. If you were looking at it as an investment opportunity, you should bear in mind that depreciation is quite significant and the costs you’ll need to cover when it’s vacant will eat into any profit you may have accrued.
Can I buy a retirement property for my parents?
Yes, you can. As long as your parents meet the criteria for living in the property then there is no issue with you purchasing one for them. It is worth noting that certain retirement properties have specific age requirements for occupants to meet. Some may state those living there must be aged 55 and over, others may say 60+ is the minimum whilst in cases where assisted living is needed, the required age may be higher.
Purchasing a retirement home must be given a great deal of thought. Should your parents pass away, or decide to move elsewhere, you may need to sell the property. This can often be tricky as retirement properties lose their value very fast. In addition, whilst it still sits there empty, you will still have to pay the monthly service charges.
Key considerations when buying a retirement property
Before you decide that a retirement property will give you a valid investment opportunity or your parents a nice place to live, you will need to weigh up a few things.
Age restrictions
Some properties may stipulate a certain age for ownership as well as occupancy, and others may just stipulate an age for occupancy. Knowing this will save you a lot of trouble before you commit to buying. If you’re the retirement home you have planned for your parents can only be owned by somebody aged 55+, you may have to think again if you haven’t reached that age yet.
Legal issues
If you are buying this property for someone else, you’ll need to borrow the expertise of a solicitor. If you are buying the home on behalf of somebody, you’ll need to know all about the power of attorney.
Rules
Certain retirement properties are fully managed and come with a set of rules. If buying the home for your parents, you may want to investigate whether those rules align with what your parents are hoping for from a new home.
If you are considering selling your house to fund the purchase of a retirement home, are looking to sell part of a property portfolio to aid in securing a retirement property for your parents or have a retirement home you have struggled to sell, speak to Gaffsy. We buy any home regardless of its type, condition, or location. Our fee-free model means you won’t be stung by surprise charges or any hidden fees. We sell your house fast, in as little as seven days if needed, allowing you to complete the process quickly and without the risk of a chain break. Contact us today to find out more.
