When you get to retirement age, there are some common questions and choices to make – one of which is whether it is better to own or rent in retirement. The Centre for Ageing Better has shown a rise of 61% since 2007 in numbers of retirees who are moving into private rented accommodation, but is it the right choice for you and your family?
The Benefits of Renting a Home in Retirement
Should I own or rent in retirement? Well, renting is a much more flexible option. You can move around, upsize or downsize, easily and change your mind each year if you want to move about the country or be near different people. There is no long term commitment (generally a tenancy term is a year) giving you freedom. Rental costs are also generally more affordable than purchase costs, meaning you could live somewhere you couldn’t afford to buy!
Costs for renting may look higher but you need to check what is included as often it is a better deal. Rental properties take maintenance and building issues out of your hands, making any problems just a phone call to sort out. Maintenance and running costs may also be reduced, especially if you take the opportunity to downsize.
Shifting over to rental rather than ownership will also release funds from your house. You could use these funds to cover costs, or invest them to make some extra money on top of your pension.
Selling a house further down the line may not be ideal either. Perhaps the stress of moving is a reason to get out of the housing market now. Maybe idea of having to manage the estate or organise moving home further down the line is daunting – especially if it might be on your own.
So Is Owning a Home In Retirement a Bad Thing?
No – there are many benefits to owning a home in retirement! It is all about making your situation, money and future work for you, whether you own or rent in retirement.
Owning your home in retirement gives you a solid, permanent base. This provides a level of independence and security in how long you can reside there, as well as being a familiar and personal environment.
You can also do what you want to – whether that be remodelling, extending, or painting the walls bright purple. Rental properties tend to be more restrictive in personal taste and decor, but this may not be a priority.
Owning a home makes adaptations more manageable and simple. For example, a rental property may not have a home lift (or the option to add one), but in an owned property you can do as you please – and reap the benefits of any value added to the property.
Finally, you know you like the house! Rental properties are more temporary and may not be quite what you want – whereas an owned property is all yours to change as you wish.
Downsides to Retirement Rentals
Get a balanced view and do some research into the options available as there are some downsides to renting a property in retirement.
When considering whether to own or rent in retirement, remember that rental properties do leave you in the hands of the landlord. Generally tenancies are for a year which may not leave you feeling as secure as you might want to. The landlord can take the house back and make decisions about the property without you having a choice. Some rental properties, however, are tailored for retirement rentals. Some offer security in tenure, meaning you can feel at home.
Costs for renting a home are generally higher. This BBC Article shows how retirees generally spend between 30-45% of their monthly income on rent, so make sure this is feasible. It also includes a selection of tools to calculate your costs, income and pension.
A biggie is actually finding a house you want to be in – there might not be any that tick all the boxes making a second move likely.
Remember if you move in to a rental property, it is not the end of the world – you can always go back to owning again!
Finding Rental Properties and Retirement Rentals
Retirement rentals are a growing concept, and areas are popping up all over the country. These often include more managed services and provide a sociable and bustling environment to enjoy in old age. They will probably also include services you would require that would be hard to find in a normal rental property, such as a home lift or walk in bath.
Generally a retirement rental will include maintenance, with a site manager or site contact that will be accessible and helpful in an emergency. It also may have communal areas and 24 hour services, making life simple.
Do remember that you will pay more for a retirement rental, so balance the pros and cons when choosing whether to own or rent in retirement and make sure it fits your budget.
Where to Find Retirement Rentals and Rental Properties
Aside from peering longingly into the window of local estate agents in the areas you want to move to, there are a host of resources to help you find a retirement rental home.
Retirement rentals companies are key too – you can find these properties on websites like the above, but going direct may be easier and more fruitful. Companies such as Anchor and Girlings specialise in retirement rentals, and there are loads more out there online too. Check the extra features of retirement rentals, such as 24 hour services, site managers and communal lounges.
Moving for the Money
Remember to do some serious calculations to make sure your retirement funds, pensions and investments will cover your monthly costs, which can be higher than owning long-term in some cases. If you can afford it, make sure you get the value you expect.
It can also be useful to look at investment opportunities to make your money work for you – perhaps this is why you are considering whether to own or rent in retirement.
Own or Rent in Retirement: Other Options
If you are moving home to release money, an alternative is “Equity Release” on your house. You can read all about Equity Release here on the government website.
Other options include downsizing (but still owning the property) to make it more manageable and lower cost. Leasehold properties may also be an option, with fixed term lease making the property yours but for a limited time. At the end of the lease, the property returns to the landlord (or ‘freeholder’).