Senior Citizen Housing: The Hurdles To Cross

You may have a house of your own, but as you grow older, the housing need may arise again. The reasons can be varied. You may want to move to a smaller apartment for security and maintenance reasons. You may want to move to a smaller city to reduce the cost of living. You may want to take a house to live near family or friends, or you may want to move closer to nature away from the hustle and bustle of city life.

Senior citizens are usually second-home buyers, but they can be first-time home buyers, as well. This is especially true for those who stayed in their employer’s accommodation during their working life or those who were in a transferrable job and preferred to stay on rent.

While the current participation level of senior citizens in the real estate market as active home buyers is much lower compared to other age groups, it is expected to increase significantly in the future due to an increase in their share of the population. As such, the demand for senior living will also go up.

According to a press release issued by the Ministry of Housing & Urban Affairs (MoHUA) recently, from approximately 76 million in 2001, the number of senior citizens in India has increased to 104 million in 2011. This number is expected to grow to 173 million by 2025 and about 240 million by 2050. It indicates that India is ageing rapidly, and in a couple of decades, there will be a large share of senior citizens in India’s population.

But is the realty market evolving in sync with the needs of senior citizen home buyers? Says Vimal Nadar, senior director and head of research at Colliers India: “Currently, senior living in India is being offered by private developers in two formats—independent living and assisted living. The average ticket size of independent senior living in India is about `1-2 crore in tier I cities, depending on the locality and the type of service offerings. Typical apartments range from 1-3 BHK, or villas. Apart from tier-I cities, senior living offerings by private developers have been gaining traction in tier II cities, such as Ahmedabad, Coimbatore, Kochi, Panaji and Surat. The supply surge has been driven by evolving demand dynamics, such as slower pace of life, ease of living and lower infrastructure stress in these smaller cities.” The senior living segment is also witnessing a boom in pilgrim towns, such as Vrindavan, Ayodhya, Dwarka and Rameswaram.

P. K. Vijayalakshmi, a 71-year-old retired teacher who lives with her daughter and granddaughter, has been looking for a solution, but is confused. She says: “I wish to spend the remaining time of my life, reading, writing, or doing whatever I needed to peacefully. I even wanted food on the table. So, I enquired about such places. One community from Bengaluru contacted me and offered an independent room with other amenities for `20,000 per month. Most such places are very far away from the city, which is a big problem. Apartments that provide all amenities like healthcare and other comforts are very expensive.” Sometimes she thinks it’s better to stay at home and utilise the services of a healthcare community, or a full-time help.

Despite the need, it’s not easy to buy a home after retirement owing to challenges, such as lack of financial support for the ageing population, indiscriminate pricing, absence of legal and policy support, and personal circumstances, among others. We tell you about the challenges seniors face, how they can overcome them, and how authorities can help them.

The Challenges

Senior citizens’ home needs are different from those of other age groups, so their challenges related to home buying are also different.

Financial: Senior citizens usually depend on their retirement corpus to make payments for buying a home and can’t really rely on a home loan. Also, they get shorter loan repayment periods. In most cases, at the time of loan application, the age of the borrower should not be more than 65 years and at the time of final equated monthly instalment (EMI) payment, the age of the borrower should not exceed 70 years. It means that a senior citizen can get a maximum repayment period of 10 years if the home loan is applied for immediately after retirement at, say, 60 years.

Says Adhil Shetty, CEO, BankBazaar.com: “Senior citizens face a few unique challenges when applying for home loans. The primary issue is the shorter repayment tenure due to age, which can result in higher EMI amounts. Income criteria also become stricter, as lenders focus on a steady post-retirement income, which can affect chances of approval. Additionally, senior citizens may not have a favourable credit history due to lack of recent credit activity. Though loan charges are typically the same, but the terms are adjusted based on age and financial stability. The most critical requirements are being able to demonstrate steady cash flows and being able to put up collateral. Then, getting a loan shouldn’t be much of a challenge.”

Property-related: Nowadays, many senior couples live separately from their children and need a home which caters to their age-related needs. Senior living properties have become popular in the last few years, but issues of high prices and inadequate supply persist.

Says Niranjan Hiranandani, chairman, National Real Estate Development Council (Naredco): “Senior citizens face several challenges when buying a property. Affordability is one of the main issues; many rely on their retirement corpus or pension, which may not be enough to cover the high property prices. Additionally, they often struggle to qualify for loans due to age-related restrictions or income.”

Moreover, the supply of senior living properties in non-metro cities remains limited. Developers are gradually recognising the potential, but there is still a gap between demand and availability. Pricing is also becoming more competitive, with developers focusing on cost-effective, yet quality housing options.

“Developers are now crafting solutions for this demographic, such as senior-living communities with healthcare and wellness amenities. This growing trend underscores the need for innovative housing solutions and financial models to empower seniors,” says Hiranandani.

Resale ability is another concern. Seniors may invest in properties that are tougher to sell in the future due to location, price, or limited market demand, especially in the case of senior-specific housing projects.

Inadequate Policy: There is an absence of a unified agency that can act as a nodal body to address solutions to the various challenges of senior citizens, such as financial well-being, social justice and housing, and issues related to infrastructure.

In 2019, MoHUA issued the model guidelines for the development and regulation of retirement homes which was preceded by the Policy for Senior Citizens framed in 1999, and later, with an amendment in 2007.

The senior citizens’ market has significantly evolved since then, and the good news is that a framework for the welfare of this population segment may be formulated soon. The Ministry of Social Justice and Empowerment (MoSJE) has started working on the amendment of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 and updating the National Policy for Older Person 1999. In March 2024, MoSJE formulated a document on “Minimum Standards for Senior Citizen Homes”. A framework is expected to be created based on the standards formulated by MoSJE.

Legal Problems: Many housing projects label themselves as “senior living” projects, but after completion, turn out to be regular projects.

But there’s no law to protect senior citizens from such fraud. “There is no such distinction or special dispensation available to senior citizens under the prevailing laws. However, certain developers targeting senior living are facilitating senior citizens to buy their properties,” says Venket Rao, founder, Intygrat Law Offices LLP, a law firm with offices in Delhi, Chandigarh and Hyderabad.

The Maharashtra Real Estate Regulation Authority (MahaRERA) has also cracked the whip against misleading advertisements on senior homes. Says Rao: “A significant development in the field of senior citizens getting a new home has transpired, as MahaRERA, on February 2, 2024, invited suggestions on a draft order on the regulation of retirement homes. It has been published by MahaRERA to curtail the misleading advertisements of real estate projects termed as ‘Retirement Homes’, which do not adhere to the minimum physical standards and specifications needed for senior citizens.”

If the property is being purchased through the primary market, RERA already provides most of the necessary information on its websites about the projects. However, a mechanism of helpline and frequently-asked questions (FAQs) could be introduced on the respective RERA websites. New guidelines or regulations mandating the promoters to introduce a separate helpline to help the senior citizens is needed.

Overcoming Challenges

Plan Ahead: Innovative financing schemes can facilitate healthy activity in the senior living segment but the senior population needs to realise that making such a decision closer to retirement can be challenging.

“People planning to buy a home after retirement should focus on building a robust retirement corpus that ensures a steady income stream. They should also assess future expenses, including healthcare, and set aside funds for home purchase. A strong credit score before retirement is essential for securing favourable loan terms. Additionally, they should consider any government schemes or low-interest loans to ease the financial burden. Early planning is the key. Planning should not be delayed, even if the purchase itself is,” says Shetty.

Government Support: There are some government schemes that aim at providing assistance. Says Nadar: “Existing schemes, such as Atal Vayo Abhyuday Yojana (AVYAY), aim at providing financial assistance to eligible organisations for running and maintenance of senior citizen homes to improve the quality of life of senior citizens. Under the ambit of Rashtriya Vayoshri Yojana (RVY), a component of AVYAY, eligible senior citizens suffering from age-related disability or infirmity are eligible for financial assistance from the government. The eligibility criterion has been set as senior citizens below the poverty line or with a monthly income of `15,000.”

The Big Picture

While efforts have been made to enhance the quality of life of senior citizens in matters of banking and insurance, they fall short in addressing concerns related to housing. Several aspects of senior housing require attention from the government and the realty sector.

Senior citizens require the government’s support in establishing policies according to their housing needs. They also need the Reserve Bank of India’s (RBI’s) support to relax the criteria related to maximum age as well as income for getting home loans after retirement. A concession in interest rate on home loans for senior citizen home buyers can also help them significantly.

Says Nadar: “Integration of senior living units in townships can make senior living more vibrant and livelier for the elderly, and increase the feasibility and profitability for developers, creating a win-win situation for everyone. On the policy front, the provision of tax-based incentives, relaxation in development charges, increased ground coverage, and inclusive land use zonal permits can encourage senior living-focused developers to make the projects affordable and accessible to many.”

It’s time for the realty sector and the financial institutions to take a closer look and understand the specific needs of senior citizens and unlock the untapped silver economy that is ready to spread its wings in the markets away from the metros and big cities.

The author is an Independent Financial Journalist