Renters expect to rent in retirement amid rising costs

Renters expect to rent in retirement amid rising costs

0:01 AM, 22nd November 2024, About 7 hours ago

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Nearly 40% of renters believe they will still be renting in retirement, according to new data.

The study by the Equity Release Council reveals that only a quarter (25%) of renters think they will be able to buy a home before they retire.

The news follows figures from the Office for National Statistics showing rents have surged by 8.7% over the past year.

Pressure on renters

According to the Equity Release Council, in October 2023, the average rent in Great Britain was £1,307 per month.

If older renters only receive the full state pension, currently £11,502, a retired renter will only have enough money to cover the cost of their rent for 8.5 months of the year. However, these figures assume people are mortgage and rent-free.

In 2023, private renters with a median household income in England spent 34% of their earnings on a rental home on average.

In London, however, average rents have consistently accounted for between 40% and 57% of household incomes since 2015, placing greater pressure on renters in the capital.

Later-life mortgages can help renters get on the property ladder

Jim Boyd, chief executive of the Equity Release Council, says many renters don’t realise that later-life mortgages can help them get onto the property ladder.

More than 43% of renters are unsure about the mortgage options available for people in later life or retirement.

Mr Boyd said: “With homeownership increasingly out of reach for many people and forcing them to rent into retirement, it’s essential that older renters understand they still have options to climb onto the housing ladder.

“Innovations in later-life mortgages provide a way to work around affordability restrictions for people who may previously have concluded that homeownership was beyond their grasp.

“Products such as RIO mortgages, mandatory payment lifetime mortgages and lifetime mortgages give older customers more options than ever before. It’s crucial to understand you don’t have to be a homeowner before taking out these products on a new home.”

Data from the Equity Release Council shows that later-life mortgages are becoming more common (39%) and acceptable among consumers. Almost a third (29%) of current renters believe getting a mortgage in later life is a positive step that offers more financial freedom and flexibility.


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