Retirees shun home ownership for rental market
More than two in five (42%) retired renters are former homeowners who have made the decision to sell up, mostly because of financial reasons.
Two in five were forced to sell their homes to pay off debts, nearly a fifth needed to release funds in order to cover the cost of a divorce or separation, and nearly one in ten sold their home so they could use the money to boost their retirement income.
But deciding to rent comes at a cost, Prudential said.
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 a third of the average expected retirement income of £15,300 a year.
Stan Russell, a retirement expert at Prudential, said: “Renting in retirement can make financial sense and accessing property wealth to boost retirement income is a genuine solution for many.
“However, retirees should be aware of the extra financial burden they could be taking on if they choose to sell up and rent.”
Almost one sixth of retired renters chose not to own their home as a lifestyle choice, while over a third rent because they don’t have enough money for a deposit to buy a property and 41% cannot afford home ownership.
Aside from personal financial reasons, many former homeowners decided to sell up 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.