Renting in Retirement – Girlings practical and affordable housing solution

Peter Girling, Chairman of Girlings Retirement Options says:

Projections from the Office for National Statistics suggest the number of pensioners will rise from 12 million to 16 million by 2050. The UK has an ageing population and the over 65s are more active and living longer than ever before. However, with an average retirement of 25 years, the demise of financial salary pension schemes and the recent financial crisis, retired people will be challenged to finance a secure retirement.

Although the government has pledged to change the retirement age limit to 66 in 2020 and 68 in 2045, this will do little to alleviate the financial difficulties predicted for the retired in years to come. The National Retirement Risk Index shows that even if households work to age 65, 44% will be ‘at risk’ of being unable to maintain their standard of living.

One practical option is for retired people to sell their homes in order to release capital to fund their retirement and then downsize or rent. The majority of property wealth in the UK belongs to the newly retired. Currently, 70% of over 65s are homeowners in the UK and many of them are living in large, but under occupied family housing. Just 4% of this group still has a mortgage and the value of property is estimated by the Council of Mortgage lenders as around £1 trillion.

According to the office for National Statistics the life expectancy for those aged 65 in 2008 is projected to be 21.0 years for males (86 years) and 23.6 years for females (88.6 years). Today the average age of tenants in residence with Girlings is 84 years it therefore makes economic sense with historically low interest rates and the corresponding low return on investments to sell property outright and if necessary use the capital to help fund retirement and reduce the strain on the ever decreasing UK pension pot.

Releasing this capital will enable people to enjoy greater financial freedom, invest their money to fund health or social care in later life and even gift portions of their capital to relatives now to avoid such hefty inheritance tax when they die.  What’s more, they will be also be freeing up much need family homes, which are in such short supply.

The housing options available

Many retired people decide to sell their homes to downsize and opt to buy a small apartment or retirement property. But one of the major drawbacks is often the price. New retirement properties are relatively expensive and there are maintenance and insurance costs associated with home ownership. A few years ago investment in a ‘buy to let’ might have a seemed a sensible nest egg people, but those days are gone and the thousands of ‘buy to lets’ sitting empty all across the UK are a testament to this fact.

Deeply embedded in the UK culture is the importance of home ownership, however, this mentality is changing.  More and more people are choosing to rent in retirement to enjoy a more economical and hassle free way lifestyle, especially if this can be on a long term “Assured Tenancy” providing security not attainable with the more usual Assured Shorthold Tenancy.. People are beginning to see renting as an opportunity to live in different locations, enjoy greater financial freedom and leave behind maintenance worries and costs.

We have seen a 25% rise in the number of people renting our properties in the last three years and 60% of them had homes to sell. One of the big attractions for people is our assured tenancy agreements, which unlike other rental contracts, allows tenants to remain in their properties for life.  In addition, our properties are for the active retired; people who want to live independently but at the same time want the peace of mind that comes with knowing there is a house manager on site or a 24 hour help line in case they need it.

Renting also offers a low risk way for people to try out living in a different community or location and, because we have over 2000 properties across the UK, they can simply move if they choose and many do. But most importantly, renting offers a practical way to fund comfortable retirements alleviating some of the financial worries that lie ahead for so many.