It is claimed that 25% of retirees are now living in rental property, and that 18% of the entire renting population is now age 55-plus. It is also estimated that 40% of retired renters are former homeowners, so what’s the big appeal of renting in retirement?
According to data released by Prudential, 40% of those who sold up and moved to rental accommodation in retirement did so to pay off debt, a further 19% did so to cover the cost of a divorce or separation and 9% to boost their retirement income.
But Patrick Chambers from Quick Move Properties suggests that renting in retirement may be a less attractive prospect than it first appears.
Patrick comments: “Whilst renting might initially seem like a great option, especially with a lump sum from the sale of your former property in your back pocket, that lump sum can disappear surprisingly quickly. For example, to buy a two-bedroom bungalow in Portsmouth will cost you around £110,000. To rent a similar two-bedroom bungalow in the same location will cost you around £800 per month. Whilst the £800 a month might seem like a much better deal when you have £110,000 cash sitting in your bank account, that £110,000 will cover just over 11 years of rent at that rate. And then what? And that’s assuming you don’t spend any of the £110,000 on any other purchases or investments, and you don’t want to leave any inheritance for your loved ones. By contrast, if you purchase the bungalow for £110,000, the chances are that during the period you own the property inflation will see the price of the property rise, rather than fall, leaving you, or your loved ones, a nest egg of at least £110,000.
“Of course, not everyone who chooses to move to rental accommodation does so for financial reasons. Property maintenance is also a key driving factor. Again, however, turning to rental property is not necessarily the answer. Choosing to downsize to a smaller, more manageable property, a low maintenance bungalow or residential park home aimed exclusively at those age 55-plus can offer great low-maintenance options at affordable prices.
“It’s also important to consider that with rental property generally in high demand, property suitable for retirement may become increasingly challenging to find. Just 9% of landlords currently rent to retirees, down from 19% in 2012. With a scarcity in rental retirement property, options may be incredibly limited in the future. Downsizing to a smaller property instead can offer many of the benefits attracting retirees to rental accommodation, but with the added financial security and peace of mind that comes from owning your own home.”
If you’re considering downsizing in retirement, Quick Move Properties’ property part exchange and assisted move services could help you secure your new home whilst offering a quick, smooth and guaranteed sale of your existing property. For more information, call the Quick Move Properties team on: 01793 840917 or email: email@example.com.