Landlords and lettings agents will face a significant demographic shift as new research indicates one in three pensioner households could be renting by 2044, according to a report from the Association of British Insurers.
The report, titled ‘Pensions Adequacy: Housing, Households and Auto-Enrolment’, projects that almost two million additional people will retire without owning their home over the next two decades, representing a substantial change in retirement patterns.
Private rental sector growth
The private rental sector will see the most significant impact, with the number of pensioner renters expected to more than triple, increasing by 1.3 million people by 2044. This demographic shift comes at a time when housing market activity has shown signs of decline, potentially creating new challenges for the rental sector.
The research, conducted by the Pensions Policy Institute for the ABI, found that renters face substantially higher costs in retirement compared to homeowners. Privately renting a two-bedroom property throughout retirement costs between £200,000 and £400,000, according to the analysis.
Financial implications
The figures present a concerning picture when compared against pension savings. The average defined contribution pension pot stands at £154,000, dropping to £105,000 for women. This gap means rental costs could consume a person’s entire private pension savings, leaving the state pension to cover all other living expenses.
Dr Yvonne Braun, Director of Long-Term Savings Policy at the ABI, stated: “For previous generations, home ownership was a cornerstone of financial security in retirement, but for many younger people it will no longer be the norm. With more people renting, paying off a mortgage, or living alone in older age, we need to rethink what an adequate retirement looks like.”
Sector challenges
Aaron Strutt, Product and Communications Director at Trinity Financial, described the projection as “worryingly high”, particularly given the number of landlords who have exited the rental sector in recent years. The buy-to-let market has experienced significant changes, with many landlords reassessing their portfolios.
“While renting is fine when you’re younger and working, especially because of the freedom it gives, it is much harder when you are older and not working,” Strutt noted. “As they get older, most people want more security, especially as far as their housing is concerned and they do not want to be moving home every few years.”
Market outlook
The findings suggest landlords and lettings agents will need to adapt their tenant assessment criteria and property offerings to accommodate an ageing rental population. The shift also raises questions about housing security and affordability for pensioners who lack substantial pension savings or investment income to supplement fixed incomes.
