Suffolk Building Society has highlighted the mounting financial pressure on older renters, warning that many could spend a substantial share of their pension income on housing unless they explore alternative options, including later life lending.
The Society’s analysis notes that while the state pension age is 67, the average UK retirement age is 64. With life expectancy stretching for around 16 years beyond that, the potential financial burden is considerable.
Based on current average monthly rents of £1,360, a typical retiree could spend £261,120 on rent over the course of their retirement. In London, where average rents are higher, this rises to £434,880.
Even downsizing brings only marginal relief. The average rent for a one bedroom property stands at £1,103 a month, amounting to £211,776 over the same period.
Charlotte Grimshaw, head of intermediaries at Suffolk Building Society, said: “These rental costs are particularly striking when you consider most retirees have a reduced income in retirement.
“It’s a real concern to think that a large share of their pension income could be consumed by rent.
“Renting has a clear role to play at various stages of life, but given these figures, some may want to explore alternative options.”
RENTING PRESSURES IN LATER LIFE
The Society notes that renting beyond working age can present a range of challenges, including reduced financial security, weaker security of tenure and limitations on adapting a home for future mobility needs.
However, it argues that the later life lending market has evolved rapidly, and that many older renters may be unaware of the increased flexibility now offered by some lenders.
Options that brokers can discuss with clients include joint borrower sole proprietor arrangements, criteria that take rental payment histories into account, lenders with no maximum age limits, and the use of pension assets or drawdown funds within affordability assessments.
Suffolk Building Society suggests that these developments could help some older renters transition into homeownership for the first time, even if they had previously assumed it was unattainable.
LENDING OPTIONS FOR OLDER RENTERS
For those who can provide a deposit, the Society will lend up to 5.49 times income for applicants with a 12 month rental track record, provided their rent is within 10% of the prospective mortgage payment. Based on current average rents, this could allow an older renter paying £1,360 a month to be considered for a mortgage with monthly repayments approaching £1,500.
Grimshaw added: “There’s understandably a huge focus on first time buyers right now, but given the substantial rental costs retirees may face, it is equally important for this underserved group to be helped.
“Brokers are well placed to support these customers by combining products that recognise rental payment histories with criteria designed for older borrowers.”
She said that building societies in particular can offer more personalised assessments than many high street banks, taking into account an applicant’s full circumstances rather than relying solely on rigid rules.
“Many older renters may have tried to buy a home in the past but found it out of reach. Our message is that the mortgage market has changed significantly in recent years, and it may be worth taking a fresh look.”
