‘Forever renters’ in 40s and 50s risk penury in retirement
A ‘LOST generation’ of future pensioners risks penury in old age as the prospect of owning their own home slips away.
Soaring property prices means ‘forever renters’ — currently in their 40s and 50s — are destined to spend their retirement years in rental accommodation.
This may be unsuitable for their needs — and overpriced.
Experts describe renting in retirement as a ‘time bomb’ which will stretch the finances of many older people.
They also warn this will leave many in this age bracket coping with unprecedented psychological pressures caused by the financial pressures of an ever-changing rental market.
There has been a significant growth in the number of people aged between 40 and 60 living in accommodation they do not own.
According to Central Statistics Office figures, the number of renters aged between 40 and 44 jumped from 28,037 to 35,909, between 2011 and 2016.
Those caught in the rental trap in the 45-49 age bracket increased from 19,328 to 23,998.
The number of renters aged 50-54 rose from 13,565 to 16,043. And those in 5559 grouping still renting increased from 8,699 to 10,934.
Latest data also reveals home ownership in Ireland is at its lowest level since 1971.
House prices rose more in the first six months of 2017 than in the whole of last year.
And the cost of renting also continues to shoot up. In some Dublin areas it has become twice as expensive to rent as to buy.
Friends First chief economist Jim Power says older renters face a number of serious challenges in retirement.
“This is a huge issue because when people who own property reach 65 or 70, they are able to release equity, or trade down if they so wish,” he said.
“This is a way to generate income to support them in later life. But those currently in the cohort who are renting will not be in a position to do that. They will be totally at the whim of the landlord sector.
“The rental sector in this country needs to be turned into an institutional-led model, similar to what’s in place in Germany, where big institutions in the main provide the rental properties. These are heavily regulated, with rent controls in place, and tenants have security of tenure.
“In other words, what we need to do in this country is to create a professional rental market — something we do not have at the moment. The one thing the Irish rental market is characterised by is a total lack of professionalism.”
Speaking to the Sunday Independent, Mr Power pointed to the growth of the precariat worker, an emerging global class with no financial security, job stability or prospect of career progression.
They have no certainty about future employment and no certainty about pensions.
“All of the old-fashioned benefits that people enjoyed in jobs are being gradually dismantled,” he said. “It’s creating a very insecure section of the population.”
A growing number of millennials in Ireland are now working in the so-called ‘gig economy’ — they are self-employed and work casual hours.
“On top of this, they don’t have security of tenure and most likely, if they have a pension scheme, they have a defined contribution scheme,” said Mr Power. “I think the issues are even worse for that particular generation.”
Experts warn the risk is that the ‘gig economy’ creates a permanent underclass of employee.
Meanwhile, property prices rose more in the first six months of 2017 than in the whole of last year.
And, analysis by the Economic and Social Research Institute shows house prices are set to soar by 20pc in the next three years.
The ESRI warned property prices could reach Celtic Tiger levels again by 2020. The research body recommends the Government focus on increasing housing supply as a matter of priority.