Renting in retirement in UK costs four times more than owning

Renting a property during retirement costs almost four times as much as owning one, UK research shows.

Pensioners who do not own their own home need an average of £11,491 (A$18,385) a year to cover rent, utility bills, ground rent and service charges, but the average home owner needs only £3,020 (A$4832) a year to maintain their property.

As a result the average person would spend £133,117 (A$212,987) on living costs during a 16-year retirement if they rented a home, rather than living in one they owned outright, according to the insurer Friends Provident.

The group said someone who started saving into a pension at the age of 23 would need to save only £40 (A$ 66) a month to cover their housing costs in retirement if they owned their home, but this soared to £150 (A$240) a month if they planned to live in rented accommodation.

The difference is even greater for people who do not begin saving into a pension until they are 43, with home owners needing to set aside about £115 (A$184) a month to cover housing costs, while tenants would need to save £450 (A$ 720).

Jeremy Ward, the head of pensions marketing at Friends Provident, said: “Renting a property can often be a difficult cycle to break out of due to the initial money and deposit needed to purchase a house. Renting during retirement creates further difficulties and means that renters need to be more prepared and have a much larger annual income in retirement to keep a roof over their heads. In turn this means that renters need to be aware of the extra income required and make provisions for this in their pension planning.”