Brokers discuss the rising number of older renters and their impact
The number of renters over the age of 65 is set to climb further over the next decade, as rising mortgage rates make homeownership increasingly unattainable, according to the English Housing Survey.
Brokers and property experts have delivered their views on renting into retirement, as well as the reasons behind why there is a rising number of people doing so.
Private rental is “not an option”
Rhys Schofield (pictured left), brand director at Peak Mortgages and Protection, said the “sad reality” for many is that if you retire and do not own your property outright, you can be “condemned to a miserable retirement living in poverty.”
“Private rental on a meagre pension is not an option for many with rental prices through the roof, and social housing is like hens’ teeth,” he said.
Schofield added that lending into retirement needs to be treated very carefully too.
Tahina Akther (pictured right), barrister and co-founder at Wildcat Law, has increasingly seen that older couples who previously owned their homes are forced to rent post-divorce as they simply cannot afford to buy separately.
“This is usually due to higher interest rates and shorter mortgage terms available to them, making the repayments unaffordable,” she said.
The focus on mortgages being repaid during an individual’s lifetime, Akther said, is one of the primary issues. With average house prices now so much higher than wages, she said, it must be time to look at more flexible products for older homeowners, such as a part repayment or a part lifetime mortgage, with the latter repaid upon death.
Michelle Lawson, director of Lawson Financial, concurred with Schofield that caution has to be applied to renting in older age, as this would be a significant outgoing from a potentially diminished or decreasing income.
“Considerations should be made about how such costs would be maintained from pension, private or state, as well as general living costs,” she said.
There are products, however, Lawson added, such as retirement interest-only mortgages and Reverse Joint Borrower Sole Proprietor products, where children can help parents with affordability.
Homeownership not for everyone
Meanwhile, Joe Stallard, director and advisor at House and Holiday Home Mortgages, said not everyone wants to own their home.
“For some people, at any age, renting is a choice; there is less responsibility for the property, as well as more flexibility and freedom for those who love to travel for longer periods of time,” he said.
Stephen Perkins, managing director at Yellow Brick Mortgages, agreed with Stallard that there are some advantages to renting in later life.
“These include having the flexibility to easily move closer to family when needed, not being responsible for the property maintenance, and of course, no risk of your home being sold to pay for your care,” he said.
Perkins would estimate though, that the majority of people in this situation are there from circumstance rather than lifestyle choice.
With house prices rising so much over the last 20 years and incomes not keeping up, he said those that did not have the opportunity to get on the ladder in their younger years make up most of those renting in later life.
“If they want to buy now, they would need a large deposit, thereafter equity release or a retirement Interest-Only (RIO) mortgage may be plausible options,” he added.
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