The number of first-time buyers entering the property market has reached its highest level since 2007, but at the other end of the property market it is a different story.
Research from Prudential has found that greater numbers of retired people are choosing to step off the property ladder to rent. One-third of renters are now aged over 41 according to the research, compared to one-fifth just two years ago.
Prudential says that 42% of retired tenants are former home owners and their main reasons for selling up include paying off debts (40%), boosting retirement income (9%) and helping their children. 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. Our research shows that many retired renters are perfectly happy with this arrangement."
While the majority of retired renters (58%) have never owned a home and three-quarters of them plan to continue renting for the foreseeable future, there has also been a marked increase in the number of homeowners choosing to sell up and rent in retirement. Forty per cent of former home-owners were forced to sell up because of debt, while 19% needed to release funds to cover the costs of divorce or separation.
Nearly one in ten people sold up to use the money to fund their retirement. With the average retirement now 25 years and life expectancy at 86 years for men and 88.6 years for women, the pressures of financing a long retirement are being felt by many people. The situation is not helped by rising living costs, the financial crisis and low interest rates reducing returns for savers.
By selling and renting, people can release all of their capital, gift some to children, invest some and finally sort out their affairs while living the life they want to live. They then have a fixed monthly outgoing and can budget accordingly in the knowledge that their property maintenance and the upkeep of the buildings and gardens are included in the rent.
But there are other attractions to renting in retirement too. Retirement communities involve social activities that can help combat loneliness. Renting is also more flexible - the ability to move at short notice can be handy for those moving into nursing homes, and it doesn't leave family members rushing to sell the property to fund care needs.
Retirement developments tend to be located close to local shops and health centres, and with good transport links. There are often support services available too, such as an emergency call service in the apartments and a house manager available during the week to check in with tenants and keep an eye on them. Such services and benefits are very important to older people and are also driving the rise in renting in retirement; it is not purely a question of economics.
Peter Girling is chair of Girling Retirement Rentals
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