The only crisis that this market is experiencing is obviously the crisis of the sixties. And for good reason, it is perfectly consistent with the aging of the French population.
What is a senior residence?
The senior residence is a non-medicalised establishment for people over 60 years old, autonomous and able-bodied. Residents can live in a flat ranging from a studio to a 4-room apartment or in a house (rare in France) and benefit from numerous infrastructures and services such as communal lounges, restaurants, home help, etc. Their aim is to facilitate residents’ daily lives as much as possible and to promote their independence without taking them away from their loved ones. These establishments are located not far from the city centre and amenities (pharmacies, shops or doctors).
How do you explain the growth of this market?
The baby boom generation is reaching retirement age, and thanks to medical advances we are living longer and longer.
As a result, the increase in the number of senior citizens in France goes hand in hand with a growing demand for access to establishments specialising in the third and fourth age market.
As this type of residence is fairly recent and often confused with the EHPAD, it is not yet very well known by the general public. But these residents are very satisfied with them.
These senior residences are not only advantageous for the elderly. They are becoming increasingly popular with investors and entrepreneurs looking for economic growth and a promising investment. For example, they are one of the safest and most profitable real estate investments. A good real estate investment also offers you tax advantages.
Why invest in a senior residence?
Investing in a senior residence is an interesting choice from a financial point of view for at least five reasons:
You reduce your taxes by taking advantage of the various tax exemption schemes (LMNP, Censi-Bouvard).
You build up a supplementary income, or even a growing annuity, particularly by investing on credit. This additional income is guaranteed by the operator under the commercial lease.
You are freed from the pressure of rental management. From finding a tenant to carrying out entry and exit formalities, including the management of any outstanding payments: you don’t have to worry about anything.
You benefit from the advantages of new properties, which are highly valued by tenants. This argument is all the stronger when it comes to the senior population. The use of certain non-slip materials or ergonomic furniture promotes the safety of senior citizens, even though these features are not always possible in the traditional home.
You are participating in a social issue. Demographic ageing will have a lasting impact on our society. By investing in a senior residence, you are offering seniors a comfortable and responsible future.
Investing in a senior residence: how profitable is it?
Rental returns vary from one residence to another. Generally, they range from 3.8% to 4.25% gross. After deduction of charges, they are in the region of 3.3% to 3.75% excluding tax benefits.
By 2050, the proportion of people over 60 will have risen from 20% to 33% of the population. It is therefore with the aim of boosting the market for senior residences that the 2012 Censi-Bouvard law offers a tax rebate of 11% (excluding VAT) of the amount of the investment. Thanks to this scheme, you can directly reduce your income tax over a period of nine years, up to a maximum investment of €300,000 excluding VAT per year, while respecting the €10,000 per year limit on tax niches. This represents a maximum tax bonus of 33,000 euros, distributed equally over nine years (i.e. 3,666 euros per year).
In return, you sign a contract with the operating company for a minimum of nine years in order to support the economy of this market. At the end of this period, the lease is tacitly extended by 3-year periods with the possibility for you to terminate it every 3 years on the anniversary date.
For all these reasons, senior investment is very fashionable and is becoming increasingly popular, both because of the explosion of the senior market and because of the support of the state.