The Pros and Cons of Renting in Retirement
Category Rental Advice
Research shows that in many parts of the world, an increasing number of people aged 55 and up are choosing to rent rather than buy property. Greg Harris, CEO of Chas Everitt Property Rentals, looks at the pros and cons of becoming a “Silver Renter”:
- Less maintenance. Not having to worry about the work and costs involved in property maintenance is a major factor for many seniors who decide to rent, especially if they move to a sectional title complex or retirement village where levies paid by the property owners cover the cost of maintaining the buildings, gardens and other communal facilities.
- More security. It is hard – and costly – to keep up security on a freehold property, especially as you grow older. You may need additional equipment or technology such as electric fencing or CCTV cameras, and the monthly costs of an armed response service will go up every year. If you rent, on the other hand, you can choose a property that has all the security features you want at no cost to you. If you plan on travelling more in retirement, you can also choose a lock-up-and-go property in a secure complex and not have to worry about break-ins while you’re away.
- Savings on running costs. Steep hikes in property rates over the past few years have prompted many seniors to rent rather than own property, and if they downsize at the same time, their municipal bills for water and electricity are also likely to be lower. In addition, many landlords are now installing energy-savers such as solar geysers and prepaid meters to make their properties even more attractive to potential tenants.
- No more home loan. Seniors who have used their home loans to finance other things such as their children’s university fees may still have a relatively large outstanding balance to pay off, and it can be a huge relief to sell their homes and not have that debt hanging over them as they get older.
- Cheaper insurance. You won’t have to insure the structure any more, just the contents, and that can amount to a tidy sum each year that you can put towards your rent.
- More amenities. If you decide to rent in a complex or retirement estate you will very likely have free access to communal amenities such as a pool, tennis court, clubhouse, gym and shopping shuttle. There may also be a restaurant on-site, and even a spa or a business centre that is useful if you are still working but don’t need to travel to an office every day.
- Possible loss of status. There’s an undeniable sense of pride that comes from being a homeowner, and many people might feel that selling up and deciding to rent when they get older is “going backwards” – especially if their friends and colleagues are still homeowners. It may also be difficult to detach from a home where you have lived for many years and built up lots of memories.
- More money for less space? If you rent a smaller property, it may feel like you are paying much more per square meter than you were for your own home, depending on how big your bond repayment was every month. However, this rental may be saving you all sorts of other costs that you had to pay in addition to your bond. You need to make sure you are making a fair comparison.
- More uncertainty. Probably the biggest factor that counts against renting is that it takes away a large measure of your control. If something needs fixing, it will be up to the landlord to decide when to attend to it. If you have horrible neighbours in a sectional title complex, your landlord will have to deal with it through the body corporate. And, of course, your rent is likely to go up every year or two, while the bond on your own home would most likely have been going down.
*According to a report by the Joint Centre for Housing Studies at Harvard University, people aged 55 and over accounted for 42% of the increase in tenants in the US last year and have been dubbed the “Silver Renters”.
In the UK, a recent study by the Saga group found that 32% of people over 50 now live in rental homes, up from 26% in 2011. This would appear to confirmed an earlier Your Move survey which found that 18% of the 4,5m tenants in private rental homes were over the age of 55, and another 22% were aged 46 to 55. What is more, 46% of the over-55 tenants said they were happy renting and only 19% said they would like to own a home in the future.
Author: Barry Davies