Home ownership rates were 75% in 1991 but are now below 60%. By 2048, they’re predicted to fall to 50%, and an estimated 40% of retirees will be renters, according to Retirement Commission forecasts.
A community of residents, with amenities and accessibility
As demand for a more flexible retirement option grows, it could possibly be met by New Zealand’s growing Build to Rent (BTR) sector. BTR developments are dedicated to renters, and units are not for sale individually. This provides long-term security of tenure for residents, who become part of a community, typically in a location that’s close to transport links and shops.
Current BTR buildings have services such as on-site management, gyms, rooftop barbeques, shared community spaces, EV charging and other amenities. Most BTR companies also follow Universal Design Standards that include wider doorways, spacious corridors, and non-slip flooring, for example. These make the buildings accessible for most potential residents, including wheelchair users, for instance.
Units in these BTR developments aren’t necessarily cheap. Rents tend to attract around a 20% premium compared to market rates, but that reflects the value of the location, amenities and security. While this rental option currently exists for retirees, I wonder if there would be more demand from the market for a specific BTR offering for those in the over 65 category? That is, creating a community of like-minded individuals at the same age and stage as their neighbours.
Options already exist for people to join such communities in retirement villages, but wouldn’t it be great to have similar options for those who are in the rental market?
Currently, BTR developers are not legally permitted to ask for the age of a tenant or a prospective tenant (other than to confirm they are an adult), which would need to change for a specific retirement BTR development to be successful. But we know they would welcome older tenants, who are widely viewed as “quieter, more stable, less likely to damage property and more likely to pay the rent on time,” according to a 2024 research report by the Retirement Commission.
A new option for effective money management in retirement
It’s easy to imagine why renters would choose to live in a BTR development: security of tenure, a likeminded community and flexibility. For homeowners, it’s an alternative to a reverse mortgage. Reverse mortgages are growing in popularity because they allow retirees to escape the ‘asset rich, cash poor’ trap of owning a valuable home but struggling to pay the bills. But a reverse mortgage must be repaid, and the homeowner still faces the high maintenance costs and often low accessibility of their old house.
For many older New Zealanders, retirement village living is an appealing and appropriate option, offering community, amenities, and increasing levels of support over time. At the same time, the preferences of those approaching and entering retirement have more diverse needs, financial circumstances, and expectations around housing.
There is a growing group of over 65s who are still highly independent and who prioritise flexibility, liquidity, and location in their housing choices. For these individuals, particularly in the earlier stages of retirement, a professionally managed build to rent (BTR) offering could form a compelling part of the broader retirement living continuum.
Modern BTR developments are typically low maintenance, well located, and amenity rich, offering many of the lifestyle benefits retirees value, while preserving flexibility around tenure duration and future housing decisions.
As one BTR developer observed in discussions with the Retirement Commission, “What’s been missing is a secure tenure rental option that allows over 65s to downsize confidently without constraining future choices. We’re offering long term security - up to ten years - but with the understanding that residents can stay for life if that suits their circumstances.”
Options like BTR expand the overall retirement housing ecosystem rather than competing directly with established village models, which continue to play a critical role as residents’ needs evolve.
In addition, if retirees want to sell their family homes to move into rentals, they help improve the flow of larger homes into the housing market.
An investment in the future of retirement living
Build to Rent faces some of the same profitability challenges that we outlined in our retirement villages report, The Path to Profitability. The returns are steady, but slow, and this isn’t a sector for small-scale or retail investors. In contrast, it’s an ideal fit for institutional investors: KiwiSaver funds, iwi investment vehicles and international pension funds, for instance. For this patient capital, BTR can provide steady returns and positive social impact, so there’s a dual benefit for these large-scale investors.
Here in Aotearoa, Simplicity is leading the way. Last year they announced a $500 million BTR project in Queenstown that will build up to 600 long-term rentals. Based on the conversation led by Shane Brealey at Te Reiputa, this may actually be over 1,000! These are desperately needed in the region, which has a chronic housing shortage, and is being funded by a steady stream of KiwiSaver funding. Simplicity has already built and rented 507 units, with another 748 under construction, plus another 1,287 (including Queenstown) in the pipeline.
As the housing sector evolves, tapping into these patient capital sources could unlock a new wave of age-friendly rental communities, especially in high-demand areas.
A new ‘rental retirement village’ development segment could be a win-win-win for institutional investors, residents, and the wider housing market. To make it happen would require some cooperation from the government and buy-in from both BTR developers and prospective residents. But the outcome could be a more flexible, high-quality retirement option for New Zealand’s aging population.
