Pensioners are moving out of home ownership and into the private rented sector, a new report said.
The 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.
The Prudential report is independently borne out by a tenancy referencing firm, which says that there has been a large increase in the numbers of older tenants.
According to the Pru, two in five 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 sold up to use the money to fund their retirement.
However, on average, retired tenants are paying £423 a month in rent – two-thirds more than the average monthly mortgage payment made by a retiree. Their rental outgoings will account for nearly a third of the average expected retirement income of £15,300 a year (as measured by Prudential’s Class of 2013 research study).
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.
“However, retirees should be aware of the extra financial burden they could be taking on if they choose to sell up and rent.”
Only one-sixth (15%) of retired tenants choose not to own their home as a lifestyle choice.
The majority of retired renters (58%) have never owned a home and three-quarters of them plan to continue renting for the foreseeable future, says the Prudential report.
According to referencing service Legal 4 Landlords, which does work for both agents and directly for landlords, there has been a marked trend in older tenants. Two years ago, the proportion of tenants aged over 51 was 5%, while today it is 9.5%.
The proportion of tenants aged 41-plus, including those aged over 51, is now almost one-third, compared with one-fifth two years ago.
In contrast, referencing of tenants aged under 30 has fallen by over one quarter. Legal 4 Landlords thinks this is because more younger people are continuing to live at home for financial reasons.