Rental Is Coming to Later Living, And It Changes Your Cash Cycle

In July this year, Birchgrove hired a chief growth officer. Not a sales director. A growth officer, brought over from the States, with one number attached to the job: 96% occupancy, reached and then held. 

Read that again. The target isn’t a sales figure. It’s an occupancy figure. And the brief wasn’t to sell harder. It was to build a system.  

That’s a small detail, but it tells you a lot. Three months earlier, Cynergy Bank had refinanced two Birchgrove sites while they worked towards stabilised occupancy. Same word again. Stabilised. Lenders are now underwriting how full you stay, not how fast you sell.  

Here’s what most of the tenure debate misses. We’ve argued about rental as a customer question for years. Do older people want to rent? Will they give up the equity? ARCO put some numbers on it this summer: 72% still want to buy, but a quarter of the market genuinely wants to rent. Fair enough. That’s a marketing problem. 

But rental isn’t really a marketing problem. It’s a treasury one. 

Sell a flat and the money lands in a lump. One completion, one large sum, one date in the forecast. Rent it out and that same value arrives in slices. Every month. From hundreds of people. Forever. No completion to bank, no quarter-end rescue, nothing to smooth over a bad run. 

So the question for the board isn’t whether your residents will rent. Plenty of them will. It’s whether your finance function can handle getting paid a hundred small times instead of once. 

Most can’t. Not yet. 

This blog looks at what actually changes when your estate tips towards rental. Where the cash cycle breaks, why five revenue lines behave differently once they all land in the same monthly billing run, and what a finance function needs to look like to cope. There are a few questions at the end worth putting to your team this week. 

The market hasn’t picked a side yet 

ARCO put this to the sector at #WhatNext2026 this summer. Jonty Roots shared the data, and the headline was blunt. The market has not settled on rental. Homeownership still has a powerful hold, with 72% preferring to buy, citing the security that ownership brings. 

That should stop anyone getting carried away. Rental isn’t sweeping the board. 

But look at the other half of that number. A quarter of the market very much wants to rent. Not “might consider”. Wants. 

Kevin Beirne of Octopus Capital called rental a nuanced proposition at the same session. He described it as an interesting strategic opportunity to fill a gap in the market, and a rising area of interest for investors. Investors are circling. They’re just not betting the whole sector on it.  

Here’s what that split actually means for you, and it’s the bit that gets skipped. 

If a quarter want to rent and three quarters want to buy, almost nobody ends up running a pure model. You run both. Leasehold on some units, rental on others, often in the same building, sometimes on the same floor. 

And mixed tenure is where it gets genuinely hard. 

Two tenures means two cash cycles under one roof. One patient and lumpy, waiting on completions. One relentless and monthly, waiting on direct debits. Different risks, different triggers, different early warning signs. 

Your management pack, though, usually shows one number. Occupancy. 

That’s the gap. Most operators have built a reporting line that tells them how full the building is. Very few have built one that tells them how the two halves of the building are paying, and which half is quietly slipping. 

Jewish Care’s model, also discussed at the session, shows how layered this gets. Rent is paid separately from care, which is commissioned through local authorities, NHS funding streams or private arrangements. Three payers, one resident. Try forecasting that on a spreadsheet built for completions. 

Two models, two completely different months 

Same residents, same building, same brand on the sign outside. Now look at what the finance calendar actually does. 

That last row isn’t theoretical. When Cynergy Bank refinanced Birchgrove’s Leatherhead and Mill Hill sites in April, the facility was structured to support the properties while they achieve stabilised occupancy. The lending question wasn’t how quickly you can sell. It was how reliably you stay full. 

And read the second-to-last row again, because that’s the one that catches people out. 

A stalled sale announces itself. Someone’s solicitor goes quiet, the completion date moves, and it lands in the pipeline report by Friday. Awkward, but visible. 

Arrears don’t work like that. Four residents late by a fortnight isn’t a crisis. It’s a rounding error. Do it every month for two quarters, though, and you’ve got a working capital hole that nobody flagged, because no single month looked wrong. 

That’s the real shift. Under leasehold, your cash problems are events. Under rental, they’re drift. 

It isn’t one income stream. It’s five 

Ask a resident what they pay and you’ll get one answer. A number. Maybe two, if care sits separately. 

Ask your finance team and the list runs a lot longer. 

AEW made the underlying point in June. Renting purpose-built senior housing is now an attractive and more flexible alternative, one that may not require selling the family home at all. The decision shifts from a property-based one to something needs-based, built around lifestyle and services.  

Read that again. Services. 

When you sell a flat, you sell an asset once. When you rent it with services attached, you sell several things at once, over and over, for as long as the resident stays. Here’s what actually sits inside that single direct debit: 

• Rent, which follows the leasing rules rather than the revenue rules  
• Service charge income, now assessed as exchange income under a five-step model 
• Care fees, often commissioned separately and paid by a different party 
• Hospitality and wellbeing, where dining or activities are charged on their own 
• Ancillary extras, guest suites, transport, one-off bits and pieces.

Five lines. One payment. And they don’t behave the same way at all. 

This is where 2026 got interesting. The Housing SORP 2026 was published on 13 April and applies to accounting periods starting on or after 1 January 2026. The old risks and rewards test for recognising income has gone. Income is now recognised based on control, and providers must first work out whether a stream is exchange or non-exchange income. 

Rental income carried on much as before, under the leasing section. Service charge income did not. It now runs through the five-step model: identify the contract, identify the separate performance obligations, set the transaction price, allocate it across those obligations, then recognise revenue as each one is satisfied.  

Here’s the bit nobody flagged loudly enough. Crowe, technical advisors to the SORP working party, confirmed that care fee income wasn’t specifically covered by the working party at all. It has to be considered by reference to the five-step model yourself. 

So the largest service line in a later living business comes with no worked example. You’re on your own with it. 

Now put that against tenure. Under leasehold, this complexity is spread thin. Sales income lands once. Event fees sit quiet for years. Most months are just service charge. 

Under rental, it all collapses into the same billing run. Same date. Every month. Across every occupied unit. 

You haven’t reduced the complexity. You’ve compressed it and pressed repeat. 

The arrears data looks great. That’s the problem 

Question 1: So are arrears actually a worry right now? 

On the face of it, no. Pegasus Insight’s Landlord Trends research, published in September, found the share of UK landlords reporting rental arrears fell to a record low of 26% over the past 12 months, down from a 42% peak in 2020. Social housing tells a similar story. Housemark data showed sector arrears were 14% lower in January 2026 than in January 2025.  

Good news, then. Rent is getting paid. 

Question 2: Then why raise it at all? 

Because of where the arrears sit. Two thirds of landlords with 11 or more properties experienced arrears in the past year. For landlords holding between one and ten, it was 18%.  

Sit with that gap for a second. Same market, same tenants, same economy. The difference is scale. 

Voids follow the same pattern. Some 41% of landlords had a void longer than seven days, each lasting 66 days on average. Among those with 11 or more properties, it was 68%. 

An IRC estate isn’t a small portfolio. It’s hundreds of units under one operator. You’re firmly in the bracket where this stuff bites. 

Question 3: What’s actually driving that difference? 

Not tenant quality. Process. 

Look at how the social housing sector pulled its arrears down. Housemark’s earlier data found that while overall housing management teams had shrunk since 2023, the number of specialist rent collection officers had increased, and that shift was clearly paying off. The Hyde Group moved to an early intervention system driven by data, and has seen rent and service charge arrears fall across all tenures for three years running.  

Their chief operating officer put it plainly: they can now see how people pay their rent, if they modify their payments, if they go into arrears.  

That’s the whole thing, really. Not softer terms. Not harder chasing. Just seeing it early. 

Which raises an awkward question for a later living board. Your sales pipeline is probably reported weekly. Is your collections position? And if a resident’s payment pattern changed three months ago, who noticed? 

Three questions worth putting to your finance team this week 

None of this needs a transformation programme. It needs someone to ask three uncomfortable questions and sit through the silence that follows. 

1. How long does it take us to know what we actually collected, not what we billed? 

Billed and collected are different numbers. Most management packs report the first and imply the second. If the gap between them only surfaces at month end, you’re running a fortnight behind your own cash position. Hyde’s answer to this was data that showed them how people pay, whether they modify their payments, and when they slip. Not clever. Just visible.  

2. If occupancy dropped four points across the estate, how many weeks before it reaches a report someone reads? 

Voids don’t announce themselves either. Among landlords with 11 or more properties, 68% had a void running longer than seven days, averaging 66 days each. Sixty-six days is more than two months of lost income per unit. Ask how many of yours are open right now. If nobody can answer in the meeting, that’s your answer.  

3. Who owns the stretch between a signed tenancy and cash in the bank? 

This is the one that usually lands badly. Leasing owns the signature. Finance owns the ledger. The bit in between, billing set-up, care charges, service charge apportionment, first payment, tends to belong to everyone and therefore no one. The sector’s arrears improvements came from putting specialist people on exactly this stretch. 

And a fourth, if the mood allows. When care fee income comes up in the audit, who on your team can walk through the five-step treatment without reaching for a textbook? The Housing SORP working party didn’t provide a worked example for it. Somebody in your organisation still has to. 

Why a full building will hide all of this 

The demographics are going to be kind to you. That’s the danger. 

Knight Frank’s Q2 2026 update puts the direction of travel plainly. By 2050 the 65+ population will reach around 18 million, a quarter of the population, up from 20% in 2026 and a 32% increase in total numbers. Meanwhile, delivery is going backwards. Around 1,994 new affordable seniors homes were expected to complete in 2026 across 35 schemes, a 13% drop on 2025. Build costs, borrowing costs, land competition and planning are all doing their bit.  

The care home picture rhymes. Savills reported in June that the 30,000 new beds delivered between 2020 and 2025 were almost entirely offset by around 29,000 being decommissioned, leaving a need for roughly 139,000 additional beds over the next decade. Occupancy now sits at 87%, above pre-Covid levels.  

Investors have clocked it. AEW’s June report found UK private rented senior housing offering a yield spread of more than 150 basis points over London build-to-rent, with supply falling short.  

So here’s the uncomfortable logic. Demand is climbing, supply is not, and your building will probably stay full for years. Which means a sloppy collections cycle will never announce itself. Full buildings forgive almost everything. 

Until they don’t. 

The operators who get caught out won’t be the ones with a demand problem. They’ll be the ones who assumed high occupancy meant healthy cash, and only found out the difference when a refinancing, a regulator or an auditor asked them to prove it. 

What’s the bottom line? 

The tenure debate has been run by sales and marketing for years. Will people rent? Will they give up the equity? What does the brochure say? 

Those were never the hard questions. 

The hard one is simpler and nobody puts it on a slide. When you move from selling flats to renting them, you change how your business gets paid. Once a year becomes twelve times a year. One buyer becomes several hundred residents. One completion date becomes a billing run that has to work perfectly, every month, forever. Meanwhile the accounting underneath has shifted too, with service charge income now running through a five-step model and care fee income left without a worked example at all.  

And the market conditions will cover for you while you work it out. Demand is rising, delivery is falling, buildings stay full. That’s exactly why this is worth looking at now rather than after a refinancing conversation goes sideways. A full building tells you people want what you’ve built. It tells you nothing about whether you’re collecting what you’re owed.  

So the question for the board isn’t whether rental is coming. It’s here. The question is whether your finance function was built for it, or built for the model you’re moving away from. 

Most were built for the old one. That’s fixable, but only if someone names it. 

If your estate is running both tenures and the month end feels heavier than it should, it’s worth a conversation.