New research from retirement specialist Standard Life indicates that renting throughout retirement could cost an average of £419,000 over a 20-year period. This projection is based on an expectation that rents could more than double in the next two decades.
Data from the Office for National Statistics (ONS) shows current average rents are £1,160. However, Standard Life's research suggests this could increase to £2,350 by 2046 if rents continue to grow by an average of 3.8% annually.
This potential cost significantly exceeds the average pension wealth for individuals aged 65 to 74, which was £145,900 in 2022, according to ONS data. This suggests a risk that pensioners who do not own a home and plan to rent in retirement may not have sufficient funds for housing costs.
Pete Cowell, head of annuities at Standard Life, noted that housing costs could become the largest expense for many in later life. He highlighted the importance of planning for these ongoing costs, whether through savings or guaranteed retirement income products.
The cost of renting in retirement varies across the UK. London is the most expensive, with an average annual rent of £28,520, equating to £859,000 over 20 years. The South East follows at £17,610 annually, or £531,000 over 20 years. The North East is the cheapest region, with an average annual rent of £9,670, totalling £291,000 over two decades.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, pointed out that renting offers flexibility to move without the burden of selling a home and transfers certain maintenance responsibilities to the landlord. Conversely, owning a home can mean lower day-to-day expenses once a mortgage is paid off and provides options for releasing equity.