Renting when retired

[Blackbirdsinthgarden]

I DO know some people have no choice whether or not to rent in retirement but would be interested to hear other peoples views. I was out at a social occasion a few nights ago with my friends, their grandmother, three adult young men, mid 30’s, their partners and 4 children. During the meal two of the young men (brothers) got into a heated discussion with their cousin (a young man of a similar age, with his partner - no children). The cousin and his partner were renting a property but were saving very hard for a deposit to buy a property. His cousins (both on decent salaries) both rent and guffawed the cousin and his partner for wanting to buy their own property. They laughed and said it “was a fools game”. Both had no intention of buying their own property and told said cousin they could rent a better house in a better location rather than buy. The cousin’s view was that, if he and his partner bought in a less desirable area, they may eventually move up the housing ladder and eventually own their own home and be mortgage free in retirement.

My own young adult children made sacrifices to buy and now have a mortgage on a property which they like, but not their dream home, so I was on the side of the cousin. The two brothers earn more than the cousin and have been offered help by their parents and grandmother for a deposit, but have refused, saying that, when they retire, the State/Government will pay for their rent through housing benefit. They told the parents/grandmother that they would still welcome the money though to go on holiday! (Which was refused, by the way!).

I was taken aback and before the discussion got too heated, the topic was soon changed and we enjoyed the rest of the evening, albeit with a bit of tension in the air.

Am I being unreasonable to think that the two brothers should have welcomed money towards a deposit and that they were being naive/arrogant to think that the State will fund their housing in retirement? They both, as reasonable earners, rent quite comfortably and prioritise expensive holidays/cars over everything else. Will the Government still be able to fund their housing in retirement? Apart from the State Pension, they said they have little private pension (a mug’s game apparently!) and that they would be entitled to pension credit.

Apologies for the rant but I feel they are quite blinkered! Who knows what benefits will be available in 30+ years time (if any). I know that some people will have no choice to rent in retirement, but at their age I would have bitten my family’s hand off!!!

The state would pay if they didn't have the funds to pay (for a care home)

It would not be a care home of their choice and could potentially not be close to other relatives. The council funded care homes near me are awful.

It's unpredictable but the idea of climbing the ladder is a bit outdated. I'm not sure 50 yr mortgages are more preferable to renting tbh which is the next idea

my MIL is 60 and still pays a mortgage of £300 for her 3 bed house in London (the market rent is £3000). This is because she had to remortgage due to her divorce. I think it really depends on what the payment is, inflation and also other factors...

I think they've got their heads up their asses, but it's their choice.

I’m thinking grim large scale 1 room HMO’s for financially insecure old people

Jeez, I think you could be right.

Pensioners are exempt from the bedroom tax.

I think the days of buying a flat and watching it double in value in 5 years are gone

But choosing to rely on the state funding your care seems risky

I can see both sides. When you’re young you never entertain the idea that you’ll get old. Then you blink and it’s happened.

@onthefencesitter I don't understand your reply to my post?

my MIL is approaching retirement but still paying her mortgage. However the sum is so small in today's terms that most people would be able to afford it and it is infinitely preferable to renting.

Comparing today to someone who bought yrs ago is pointless. And I'm not convinced a 50 yr mortgage is better than renting for a number of reasons.

Obviously it was easier for my age (51) than it is today but we got on the property ladder as soon as we could. Paid off mortgage almost five years ago and knowing we don't have a mortgage or rent to worry about when we retire brings great peace of mind.

We've two adult daughters, one got her first mortgage and 24 and another is just about to buy her first place at 25. Luckily her landlord wants to sell and has offered her £4k back from her rent towards her deposit as it'll save him estate agent fees. She's been v fortunate but wasn't sure she was going to do it until we talked through her options with her.
Paying rent your whole life is a waste of money if you have other options. Of course many people don't have those options or choices.

When I retire I would prefer a one bedroom flat to a three bedroom semi with garden. Don't most people choose to downsize when they retire to more suitable accommodation?

My MIL (83) only has a partial state pension. She was a SAHM until she was in her 50s and only went to work when FIL had a heart attack that left him unable to work. She gets a top-up of pension credit plus a small widow's pension.

She lives in the spacious 2-bedroom council house that she moved into in 1961 and her rent and council tax are covered by benefits. When anything needs fixing, she just picks up the phone and the council come and fix it. Her house is incredibly well-insulated and her energy bills are relatively low.

She has more disposable income than I would have if I retired, despite me having a full state pension and a small occupational pension. I can't afford to retire, so am still working part-time. Even if I wasn't, I'd only get a bit of help with my council tax (I'm mortgage free). And I have to fork out whenever anything goes wrong with the house. I'll have to sell up and move to a cheaper area, and probably a smaller property, to be able to fund my retirement.

I can see why your DH's cousins have the views that they do, but they are taking a big gamble that the welfare state will exist in anything like its present form when they reach old age.

No, most people rattle around in their original homes. We’d love to down size but we want a garden - lockdown taught us the importance of that - and we want a decent amount of space. We’d kill each other in a one bed flat.

I've seen over 55 apartments for rent near me £95 a week. I'd happily move into one when I'm old then use the equity from house sale to go on lots of cruises. I won't need a big property when I'm old

My parents live in a four bedroom semi detached, they had no desire to move they have lived there for nearly forty years ,they own it plus its in a desirable area ,many young families for whom it would be suitable ,simply wouldn't be able to afford it.

@BMW6 actually pensioners do get charged bedroom tax if they are in private rentals as opposed to social housing or council housing

The thing is, it's difficult to rent unless you have a regular income - so paying the rent from equity might attract massive deposits.
But who knows what the situation will be in 30+ years.

Don’t pensions count as income? They’re a hell of a lot more secure than salaries, nobody’s going to sack you from being retired.

No the government will take the private pension as income and add it onto state pension so unlikely they will get any help .
If the only had state pension they would get pension credit so would be no worse off than person with additional private pension

The main problem with having no money is that you are reliant on the government and the choices it provides which may or may not be good. One of my relatives is very ill and should really go into a care home. Problem is that the nearest council funded one with spaces is 20 miles away from the spouce who cant drive so they would barely see each other

I forgot to say that my mum has a private widows pension of £250 per month. Social Services added it to her state pension of £147 per week (less £30 sundries) and this all, rightly so, goes to all her care costs (not including my £62 own top-up fee). As to the person who said that getting on the “property ladder” was outdated, I disagree; it’s just harder these days without substantial savings and perhaps with parental support. Most of my kids friends want to “get on the property ladder”. It’s not the be all or end all, but a lot of young people do want to do this. Some don’t - it’s a matter of choice. My original question was how those people who don’t own property, can survive in retirement without housing benefit (perhaps without a huge pension - which I know my friends kids won’t have - as they have effectively boasted to me about). I suppose they are relying on the housing benefit which may or not be in place 30+ in time.

Could it be that they can't buy and are just covering it up? Our old accountant was on a decent wage and was adamant that she never wanted to buy a house as renting was SO much better. I knew her mum and she told me that she was up to her eyeballs in debt. CCJ's galore (god knows how she was an accountant). She struggled to even rent let alone get a mortgage.

If not, then I think they're very unwise. Renting is a mugs game in my opinion. Especially to private landlords.

my DH's father did not work for many years so had no pension. No property either as he got divorced and MIL got the house (to raise the 4 kids in). MIL paid him £100k. He moved to thailand with the 100k and is apparently very happy with his new wife. He rents a large house in the rural thai countryside.

Maybe your friends' kids are considering doing the same...

They won't get their rent paid if they also have a small pension, will they?

They're just stupid. If they looked at what a mortgage would be on the place they rent, they'd see it was less than their rent.