Personal Finance

Senior housing — the good and the bad

Meera Siva | Updated on January 21, 2018

Housing projects aimed at seniors provide services, but have drawbacks

When it comes to choices in housing, seniors are tempted to think of senior living communities as a panacea for their problems. These projects are seen as providing various services, a community to spend time with and better quality of life.

Senior focussed projects have their positives. But it is also essential to think about the shortcomings in these projects. This will help you consider alternatives and take an informed decision..

High cost

The first downside is that you will have to part with more money when buying a home in a senior housing project compared to similar sized homes in regular projects.

The cost is high due to strong demand and the more elaborate set-up needed to operate a senior housing residence.

In general, you will pay a premium of 30-40 per cent at the time of purchase.

Not just that, you would be paying higher ongoing costs for maintenance and other charges, compared to apartments. One reason is because of the larger area and other amenities in these projects.

Also, there are additional services such as food, house-keeping and healthcare in senior projects that are not included in regular developments, which may drive up costs.

If that is not bad enough, various charges may escalate over the years. Service inflation is often in double digits and can quickly over-take the return on your corpus. Make sure you understand the likely increases and plan for it.

Service quality

The second problem is being locked into projects where the service is not good. The main draw of senior housing communities is the various services they offer.

Seniors would have faced issues in getting reliable help when living by themselves and may be swayed by the promise that these are available. But over time, you may find that the same issues afflict these communities and quality issues creep up.

Seniors may find that the food is not to their liking, when the service provider changes. Healthcare services may also not be what you aspire to get.

These services may turn out to be just boxes ticked by the developer.

Often, there is no way to find out how the service is, as many are new projects. The developer’s track record in one location may not translate to similar quality elsewhere.

You must also be aware that there are no Government or other agencies that oversee these operations. Unlike developed countries, there are no regulations in India.

Ownership terms

The third complication is on your rights as home owner in a senior housing project. Developers may have complex structures such as leasing and complicated terms and rules. These may restrict what you can do and who you can sell it to.

For example, you may not be allowed to rent out the place to others . If the home was bought outright by you, it can be rented out to seniors and be inherited by your children.

However, your children can only live on the property if they are senior citizens. The property can only be resold to seniors, not others.

So, you must view senior housing as a service contract or taking a membership. It may not work as a property investment and provide appreciation.

Long-term solution

The fourth aspect that may be overlooked is how the solution meets your long-term needs.

Many seniors may be drawn by the amenities or independent living aspects provided by these communities. But as they age, there may be more health-related issues and need for expert doctors or access to medical services such as dialysis. There may also be need for assisted living.

You must ask how these future requirements will be accommodated. You may find that developments that offer good facilities and meet your expectations are very expensive and those that are within your budget fall short.

Location limitation

The fifth issue in most senior housing projects is that they are not located centrally in metro cities. Often, due to the large size of the projects, they tend to be in tier-2 cities or in the periphery of metros. All is well when you are inside the premises. But you may find that meeting friends or relatives is not very easy due to poor connectivity and lack of commute options. Not just social life, entertainment options such as going to movie theatres or concerts get restrictive. Some may feel that they are in a secure cage.

If being close to your siblings or participating in volunteer activities are vital, you can perhaps look at other options such as serviced apartments. These can give you the benefit of many services, while enabling you to live in central locations. You must hence weigh alternatives such as regular housing with home-based services along with senior housing projects.

The writer is co-founder, RaNa Investment Advisors

Published on January 21, 2018

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