This was first published in the Wigan Observer, 27th August 2013
Property column by Tom Bridge, managing partner of residential conveyancing at Stephensons Solicitors LLP
The number of first time buyers rushing to join the property ladder is at its highest level for six years. Much of the focus of Government initiatives and indeed media attention is on the first timer and ways in which they can make home ownership a reality.
But a new survey out this week looks at those at the other end of the ladder and the rise of the so-called ‘retired renter’.
Prudential carried out the research into retired homeowners and finds that up to two million pensioners could be actively looking to sell off their family homes to meet the costs of retirement, opting to rent instead. There are many advantages to this, given that retired homeowners have huge amounts of equity in their properties and little or often no mortgage commitments.
Just two years ago, only one in five renters was over the age of 41, now that figure is one in three, with 42% of renters previously owning a home.
There are various reasons why selling up to rent instead could be attractive to retired homeowners. With people living longer, the cost of care increasing and the current economic climate, the chance to free up cash seems smart. Couple that with the parents who want to free up cash to help their own children or grandchildren get onto the ladder and it becomes a cycle. The survey also found that 19% wanted to sell up to release funds to cover the cost of divorce!
But the Prudential study also highlighted that moving into rented accommodation can come at a cost. Retired renters pay an average rent of £423 a month, while the average mortgage repayment paid by retirees who still have home loans is £257 a month.
The rise in retired renters, and therefore their properties going back on to the market, could be a contributing factor to mortgage lending being up by 29% in July compared to this time last year. Although many other factors come into play, such as those taking up the Government’s schemes such as Help to Buy, there is certainly a feeling among the housing experts that the market is moving now.