Many more New Zealanders will be renting in their retirement, but the country’s rental market isn’t prepared for that silver tsunami. Anna Murray explores potential solutions to a growing problem.
The demographics of New Zealand’s renters are changing.
With the declines in home ownership and an ageing population, Te Ara Ahunga Ora Retirement Commission modelling predicts there will be around 600,000 New Zealanders aged 65 and over needing to rent a home by 2048 – a 100% increase on 2022 levels.
It means the assumption that New Zealanders will be settled in their own mortgage-free home by the time they turn 65 no longer holds, says Retirement Commission policy specialist Dr Jordan King.
That’s why Te Ara Ahunga Ora commissioned a report into New Zealand’s rental sector. The study surveyed more than 700 landlords, eight property management companies and nine build-to-rent operators.
“We wanted to take a bit of a stocktake of how prepared the private rental sector is now [for ageing tenants] and likely going to be going forward,” King said.
The results of that stocktake were not encouraging.
A lack of suitable housing
The private rental sector is unlikely to meet the demand for age-friendly housing, King said.
“By age-friendly housing, we mean housing that is accessible, that’s configured to prevent injury for older people to live in, that is healthy and affordable and secure as well,” he said.
“We’re really not well placed at the moment for the major shifts that are starting to happen now and will pick up pace in the years to come.”
The quality of New Zealand’s existing housing stock is one problem, King said.
“Housing in the private rental sector tends to be less well maintained and less well positioned to support people,” he said.
“[There’s a] problem with the quality of the housing stock that’s already built, and the pipeline of new housing has tended to be larger dwellings and not built to accessible standards.
“So, we’re missing that supply of smaller, accessible one to two-bedroom properties that have the handrails or modifications or kitchens and bathrooms that are appropriate.”
The issue is also exacerbated by councils selling off pensioner flats and not enough social housing being built, King said.
“For those who are most financially vulnerable, where are they going to go?”
Some older people are already struggling to find somewhere suitable to rent, says Age Concern New Zealand chief executive Karen Billings-Jensen.
“Unfortunately, we are seeing a greater number of people that are struggling to get a private rental in later life or might be having to move on from where they’ve been for quite some time,” she said.
“It’s a huge stress trying to find an appropriate rental.”
The Curve’s Sophie Hallwright joined Breakfast to also speak about why she wants to rebrand retirement. (Source: Breakfast)
A lack of guidelines
The study into the private rental sector found other issues for New Zealand’s growing number of older tenants.
While the report found property managers were proactive in ensuring tenants were safe in their homes and able to look after themselves, none of the property management companies surveyed mentioned an ageing tenant population when asked about key trends impacting the sector.
They also didn’t have any internal guidelines for managing older tenants. They said this was because older tenants were not treated any differently to tenants of other ages.
How to tackle the problem?
Landlords, property managers and the Government all needed to act on this issue, King said.
“Landlords up and down the motu need to understand that putting modifications into housing – the ramp, the bathroom modification, the making sure the kitchen’s fit for purpose – that’s actually going to be really good long term,” he said.
The research found landlords had a mixed view about whether those sorts of modifications added value to their property, but King said there was a market for these kinds of properties.
“There’s going to be demand for that – and universal design is also useful for people at all ages.”
Meanwhile, property managers needed to develop policies for dealing with older tenants and brush up on issues that affect that demographic, King said.
“Stuff like cognitive decline and dementia are really going to be big issues,” he said.
“Ensuring that grounds can be maintained or just the basic stuff like keeping a property or a tenancy going is going to become challenging.”
The Government also has a critical role to play because the social housing piece is extremely important, King said.
“So, reinvigorating an interest in building fit-for-purpose housing for older citizens needs to happen as well.”
Moving to modify our homes
The Retirement Commission’s study found landlords haven’t had much experience with older renters, with nearly half never having had a tenant over the age of 65.
While nearly 40% of the landlords surveyed said they would consider making modifications to their properties for older tenants, only 24% were aware of potential government funding to make those modifications for their older tenants.
That government funding can be used for modifications like widening doorways and installing handrails, shower rails or a ramp, if a tenant needs them and meets certain criteria.
People who might be looking to buy a rental property should also consider properties that are already suitable to age in, Billings-Jensen said.
“If you are thinking of entering the rental market … homes that are single story with flat access are easier for someone to live in and to help age in place.”
Financial expert Tom Hartmann told Breakfast all employees should be taking advantage of KiwiSaver’s employer contributions. (Source: Breakfast)
Becoming a savvy landlord
With 600,000 older renters due to enter the private rental market in the coming years, landlords should know being able to provide them with good quality housing is likely going to be good for business, King said.
“We know that some build-to-rent landlords, like those bigger developers, are starting to incorporate universal design into their thinking because they can see the benefit of it,” he said.
“It’s definitely not a sunk cost.”
The Auckland Property Investors Association (APIA) told RNZ’s Checkpoint last month it was urging landlords to address the growing demand for age-related modifications to their properties.
APIA general manager Sarina Gibbon said being uprooted from a home at the age of 65 was “incredibly damaging”.
“Our members get that and want to see their tenants age in place. As the older tenant cohort grows, the economics of property modifications will become increasingly justifiable.”
Billings-Jensen said many landlords already know an older tenant is usually a fantastic tenant, too.
“They’re quite reliable and secure; they’re more likely to stay,” she said.
Benefits for the whole community
Ensuring the rental market is ready for an ageing population would benefit everyone, King said.
“People living in poor housing that isn’t safe for them can increase their likelihood of having accidents and of going into aged residential care facilities or hospital care, which is so much more expensive,” he said.
“If the system can keep people ageing in their house rather than needing hospital care or medical intervention, that’s going to be really useful for keeping our health expenditure lower at a time where it’s going to go up because the population is ageing anyway.”
Older people are also valuable within communities, Billings-Jensen said.
“We really want to see people to be able to retain living in the community where they’ve got connections, where they’re a huge support,” she said.
“Older people are such a fantastic resource for the community in terms of voluntary work or connections across the community, so being able to help someone maintain living in the community where they’ve lived for years, where they’re making a huge contribution, is really, really important too.”