The Daily Telegraph - Saturday - Money
‘I sold up at 60 and will rent for life’
More retirees are choosing to sell up and rent, free from the ties and costs of ownership, writes Amelia Murray
The number of retirees and older people moving into rented accommodation has increased by 13pc in the past four years. This is put down to a number of factors, including higher property maintenance costs, difficulty in downsizing and the need for the elderly to move closer to other members of their family.
The data shows that it is not only the priced-out younger generation swelling the number of tenants. Between 2012 and 2016 the number of retired renters soared by 200,000 according to figures from the National Landlords Association. Figures from the first quarter of 2017 show a continuing trend. According to the data, 19.96pc of renters are retired – a rise of three percentage points since the end of 2016.
Linda Clarke, 65, has been renting for five years and has no regrets. Her decision to sell up came after a long battle to keep up with the repairs on a three-bedroom semi-detached house in Eccles, Manchester. Her husband died in the late Eighties.
She said: “The house wasn’t falling down by any means, but it needed updating. The kitchen was new in 1987. It’s all right if you know a plumber, an electrician or a builder, but I didn’t. I didn’t feel I was in a position to fix up the house myself.”
The first property she rented was not ideal. It was a furnished flat in a large complex. Now she and her partner Jose Louzeiro rent a four-bed semi, also in Eccles, for £785 a month.
The maintenance is handled by her landlord. She is at risk of future increases in rent or from the landlord serving her notice, but she is confident that her income – either earned or pension – will be adequate.
She has no children and is not anxious to bequeath savings to anyone else. “Right now, I just want to live for the moment,” she said. The burden of property maintenance is a major factor in encouraging older people to rent, said Chris Norris, head of policy at the National Landlords Association. But the lack of suitable property intoo which older owners could downsize, ize, coupled with high rates of stamp duty, saw many sell and d cease being homeowners s altogether.
“Homeowners ners can often feel oppressed ed by the costs and stress of upkeep, especially whenhen things go wrong and theyhey don’t know who to turn to,” he said. “Being a private vate renter is relatively stresstressfree.” Mr Norrisrris said the growing incidence of relationship breakdowns in later life was also driving an increase in renting. But he warned that the private rental market was not serving older tenants very well. A large proportion of properties to let are in shared blocks of older buildings with stairs, and unsuitable to retirees as a result, he said. He said space was also an issue: “Developers don’t t tend to consider the size o of a property in square feet. Bu But when someone is dow downsizing from a family home to a two-bed flat the differencediffere in space can be quite a shock.” Paul Stale Staley, director of the private rental sector at SDL Group, a prop property services com company, sug suggested older pe people could be se seeking a more fl flexible l lifestyle and n not to be tied down to a mortgage. “Older renters may also be looking to release equity from their homes and are simply not yet ready to enter a retirement complex,” he added.
Patrick Connolly, a chartered financial planner at Chase de Vere, the financial advice firm, said one benefit of renting was that there is far more flexibility in terms of where you live. It is “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 if they didn’t have money tied up in property.
But he also warned of the risks. The biggest downside to renting in older age was 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 would 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 a 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 said retirees were stable tenants and had “genuine benefits” to landlords. TSB is to become the first bank in Europe to introduce iris recognition on its mobile banking to make it easier for customers to log on.
From September, customers with a Samsung Galaxy S8 or S8+ smartphone will be able to unlock their banking app using the phone’s iris scanner. It is a move away from lengthy personal IDs and passwords typically required to access online banking.
Once a customer has registered their iris they will be able to log into their online banking simply by looking at their phone screen. Iris scanning is thought to be the most secure biometric authentication. The advertising watchdog has upheld complaints about a “misleading” website that charges £34.50 to provide free European Health Insurance Cards (EHICs) and wrongly suggesting it is affiliated with the NHS.
The Advertising Standards Agency received 84 complaints about an advert by EHIC Direct, a commercial company that describes itself as “an independent application service” for EHICs. An EHIC is free from the NHS and gives UK holidaymakers in many European countries access to medical care at the same cost as locals, which is often free.