Many retired homeowners in the United Kingdom are stepping off the property ladder to join the 25 per cent of retirees who already rent, according to new research.
More than two in five (42 per cent) of these retired renters are former homeowners who, for various reasons, have made the decision to sell up.
The Prudential study found that retired people’s decision to sell their property and move into rented accommodation was mainly driven by financial reasons. Two in five were forced to sell their homes to pay debts, 19 per cent needed to release funds in order to cover the cost of a divorce or separation, and nearly one in 10 sold their home so they could use the money to boost their retirement income.
But the Prudential study also shows that moving into rented accommodation comes at a cost. Retired renters pay an average rent of £423 a month – two-thirds more than the average mortgage repayment paid by retirees who still have home loans, of £257 a month.
For someone retiring in 2013 and paying the average rent, the annual cost of putting a roof over their head will account for nearly one-third of the average expected retirement income of £15,300 a year (as measured by Prudential’s Class of 2013 research study).
Almost one-sixth (15 per cent) of retired renters choose not to own their home as a lifestyle choice, while 35 per cent rent because they don’t have enough money for a deposit to buy a property and 41 per cent cannot afford home ownership. The majority of retired renters (58 per cent) have never owned a home and nearly three-quarters of them (73 per cent) plan to continue renting.
Aside from personal financial reasons, many former homeowners decided to sell their home and rent to help their children financially. Seven per cent used some money from the sale of their property to help their children get onto the property ladder, while nine per cent used the money to help support their children in other ways.