Pros and cons of renting in later life

Patrick Connolly, a chartered financial planner at Chase De Vere, the financial advice firm, said one benefit of renting is that there is far more flexibility in terms of where you live. It’s “much easier and cheaper to move” as a tenant, he said.

He also suggested that renting could boost retirement income as older people may be able to save larger amounts into pensions and investments because they don’t have money tied up in property. But he also warns of the risks. The biggest downside to renting in older age is the lack of security of tenure. Tenancy agreements do not last forever.

The rent could also rise at any time. Mr Connolly said this could make it more difficult to budget effectively as “they have little control, outside of their contract”.

He said the issue is “compounded”, on a comparative basis, “in the current low interest rate environment where rental costs are often more expensive than mortgage costs”.

By selling their main property, wealthier homeowners will lose their entitlement to the new, additional inheritance tax exemption — known as the “main residence nil rate band” — which started to apply from April.

It offers individuals an additional inheritance tax allowance when they pass their residence to direct descendants.

“This could mean that somebody in rented accommodation faces a bigger inheritance tax bill,” said Mr Connolly.

Mr Norris said some landlords may be concerned about the income of retired tenants, especially those on state benefits.

However, he suggested retirees were stable tenants and offered “genuine benefits” to landlords.