Recent research has found that in 15 years, one in eight UK retirees will be living in rental accommodation.
According to the study by Scottish Widows, rental payments will account for almost half (42%) of the average retirement income, with the average renter needing to put away an extra £6,300 per year in order to cover the cost of rent. This works out at a monthly sum of £525 on top of pension contributions, or a further 5.1 years of work.
Despite these figures suggesting a need to increase pension contributions, the research indicated that the majority of respondents expecting to rent were not planning to do so. Even for those who said they would think about increasing their contributions, 68% stated that without making substantial compromises or receiving a pay rise, they wouldn’t be able to afford to.
Whilst the results of the study seem to cast a shadow over the future of UK renters, this picture may be even bleaker in certain regions. Due to growing demand and soaring property prices, areas such as London and the South East are likely to be hit the hardest, whereas regions in the northern half of the country will continue to be more affordable.
In order to try and reduce the amount they’ll have to pay in rent, people are choosing to move elsewhere, with 39% of prospective retiree renters thinking about relocating. In London, this figure grows to 65%.
Commenting on the rental problem extending to the older generation was retirement expert at Scottish Widows, Robert Cochran. He stated: ‘The number of people renting in retirement is set to treble over the next fifteen years, but alarmingly few people are thinking about how they would cover the growing cost of a property lease when they stop working.
‘Whilst some people may choose to rent later in life, we also need to ensure it’s a more sustainable, secure option for an ageing population, many of whom will have no choice. We’re therefore urging the Government to consider ways to refine the housing market to better suit older renters through options such as open ended tenancy, with predictable rents and protection.’
