The Emergence of the Retiree Renters
Typically we associate renting with students and young professionals building up enough capital to buy their first home and get onto the property ladder. However, the demographics of the private rental market are shifting. Here at Robert Oulsnam and Company we see more and more young families and increasing numbers of retired people looking to rent properties rather than purchase them.
This second phenomenon – the rise of retired renters – is of most significance and turns the traditional image of the renter on its head. The increase in young families turning to rent rather than purchasing a house can be ascribed to difficulties in getting a mortgage approved following the introduction of tougher lending rules by the Financial Conduct Authority, and the state of house prices in the UK.
Figures released by the Prudential Financial Services Group in 2013 showed that one third of all renters were over the age of 41, with 26 per cent of all retirees renting their current home. The largest proportion of retired renters is in the bigger UK cities where house prices are also at their highest. Of the retirees who currently rent their homes, three quarters stated that they were planning to continue to rent and had no intention of trying to buy a home in the foreseeable future, whilst 42 per cent had previously owned their own homes.
The reasons for the increase in retires renters are diverse and intriguing. Due to increase in life expectancy for both men and women the average length of a retirement in the UK has now reached 25 years. This represents a long time in which individuals must support themselves financially with only a pension. Stepping off the property ladder to become a renter enables retirees to sell up and use the funds from what would previously have been their main asset, their house, to fund retirement activities.
The Prudential figures showed that around 10 per cent of retirement-age renters had turned to renting to boost their income. Some wanted to invest money in projects other than property, others used the funds they gained from renting to aid their children through education or help them get onto the property ladder.
Paying off accumulated debts was another major factor behind retired people switching from owning their own home to renting. Around 40 per cent of retiree renters cite the need to pay off debts as the reason for their switch, as the funds released by their house sale enabled them to balance their finances and not worry about debt in their old age.
The rise in the number of divorces and separations amongst older couples has also led to more retired people requiring housing. The Prudential study showed 19 per cent of retired renters had recently gone through a divorce or separation.
With this emerging phenomenon, we at Robert Oulsnam and Company would expect more to see more landlords looking to cater specifically for the retirement market and the requirements of older people.