In the UK, the cost of renting is increasing. The growth of the rental market in the UK is influenced by a number of factors including, persistent increases in house prices and stagnant salary increases. Furthermore property investment in buy-to-let property is also increasingly popular, with rental income in some cases being used to build a bigger personal pension fund. This has all contributed to a general mindset shift towards renting. Even so, many of us still connect renting with being a young person.
However, renting in retirement is also becoming more popular. Despite the fact that many renters of retirement age would prefer to be homeowners if they could afford it, many are choosing to rent in retirement when they have the freedom to choose. In today’s post, we’re going to look into the advantages and disadvantages of doing so.
Buying a home versus renting as a pensioner
When it comes to renting in retirement versus owning a home, as with any such a significant choice, there will definitely be both pros and cons to both options, and your final decision will mostly depend on your unique situation.
There are however are a number of widespread advantages and disadvantages to renting during retirement, and we will discuss them below.
Advantages of renting when you have reached state pension age
Of course, if you decide to rent in retirement, you won’t be bound by a mortgage or pay mortgage interest but you will still have to pay rent. A rental property may result in you being able to move closer to your children and grandchildren, or have the freedom to explore places you’ve always wanted to live in without taking too many risks, this gives you more flexibility in your life.
Due to increases in property values, if you are a homeowner who is approaching retirement, you wouldn’t be the only one who decides to sell your home and rent rather than pay out your equity. Retirees have more freedom and the means necessary to fully enjoy their retirement because released equity is typically used to boost pension pots. Renting may provide a better standard of living especially with current living costs on the rise.
Financial Assistance for Pensioners
If you are looking to rent from either a private landlord or a housing association, if you are not blessed with large savings or a well paying workplace pension you may find that your state pension leaves you on a low income. If this is the case then you may be able to claim housing benefit to help pay your rent. If you do apply for housing benefit you can also apply for Council Tax relief at the same time.
Unexpected maintenance concerns are one of the main disadvantages of having your own house, according to any homeowner. Building insurance also needs to be take into consideration. Even less serious issues like dealing with normal wear and tear and leaking roofs may be laborious, expensive, and time-consuming especially if you’re pension age. In retirement, who wants to deal with that? Renting, on the other hand, will mean leaving these troubles in the hands of your landlord, which can be a very tempting option.
The rivalry among landlords and builders to secure your lease increases as the rental markets grow. Due to this, many new purpose built rental developments now have plenty of facilities. These can include guest services, gyms, swimming pools, and shared rooftop terraces. Generally speaking, these extra services will be covered by your rent, giving you the freedom to use them at no additional cost and having them right outside your door.
Warden Assisted building
Renting in retirement makes it possible for people who require a little extra assistance to move into a building or block that is warden assisted. Those with health issues or mobility issues will particularly benefit from these retirement flat buildings. Also, having a warden on site could provide loved ones with peace of mind, which may be lacking if an older relative lives alone in a house they own.
Disadvantages of renting in retirement
Increase in rental charges
Although not having to worry about a mortgage is certainly advantageous, if you rent instead there are still rental fees that must be paid, and they can be pricey. Even if the rent has recently gone up significantly, there is nothing stopping your landlord from raising it as your tenancy grows.
Renting enhances your freedom in terms of where you might live in retirement, but it can also raise your anxiety significantly. You can be asked to leave once your lease expires because you are not the property’s legal owner. You might have to move your main residence more often than you’d like because shorthold tenancy agreements are typical; if this happened consistently, it could become annoying.
Despite changing attitudes, many landlords still have concerns about allowing their tenants to have pets in their rental houses. This won’t be a problem for everyone, but for some people it will be a deal-breaker. It’s likely that if you’ve always had pets and are an animal lover, you’d wish to keep them in retirement.
Waste of money
The most obvious ‘drawback’ associated with renting at any stage of life is that the cash you spend every month does nothing for your future self. If the property continues to increase in value it won’t be you that sees the financial benefit of it. This may be less of a problem for retirees than it is for twenty-somethings, but it is still a factor to take into account when considering the advantages and disadvantages of renting in retirement.
Do you think renting could be the right option for you while receiving a pension?
You won’t be surprised to learn that there isn’t a single, broadly applicable solution when it comes to deciding whether to rent or buy a property in retirement. Yet, analysing it is a very different matter, it is undoubtedly something to consider.
You must conduct your own research because what is ideal for one retiree may be unfavourable to another. Consider the above advantages and disadvantages while also taking into account your own personal motives.
Whether you’re a buyer, seller, landlord, or renter, Western Lettings Glasgow can assist in making your real estate goals come true.
Our team of friendly professionals at Western Lettings Glasgow, which has been in business in Glasgow since 2008, is ever ready to welcome new customers into the family. Call us now to learn how we have differentiated ourselves from the competitors and how we can assist you.